RIVN Stock Forecast: What Will It Take for Rivian to Turn Things Around?


  • Rivian (RIVN) stock has cratered following disastrous Q4 earnings this past week.
  • Investors don’t seem to have much faith in the ability of early-stage EV players to capture share and grow.
  • Here’s what Rivian will need to do to turn things around. 
RIVN stock - RIVN Stock Forecast: What Will It Take for Rivian to Turn Things Around?

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Rivian Automotive (NASDAQ:RIVN) and other early-stage EV companies posted disastrous Q4 earnings. Last week, RIVN stock made quite the waves in the startup EV industry (for the wrong reasons), plunging to its lowest levels in a year. 

The EV stock bubble peaked in Q4 2021, just when Rivian went public, with Tesla’s (NASDAQ:TSLA) market cap surging past $1.2 trillion. This year is seeing automaker giants thrive as EV startups struggle. Tesla’s operating margins have been slashed by half, and Rivian faces its own problem set.

Can RIVN stock recover from what went wrong?

Apple and Rivian

Gene Munster of Deepwater Asset Management floated that since the Apple (NASDAQ:AAPL) Car project was canceled, Apple should consider buying Rivian Automotive. Given Apple’s standing as a tech business and its lack of top-line growth in recent quarters, Munster spotlighted its need for growth and its potential for expansion into key markets.

On that note of Apple needing to expand, Munster said Apple could acquire Rivian. He pointed out DJ Novotney’s January switch from Apple to Rivian. Munster has long awaited for Apple’s market cap to reach $3 trillion.

Munster was taken aback at Apple’s cancellation of the Apple Car project, which could have increased Apple’s revenue by $250 billion yearly. Rivian’s production estimate for 2023 is in line with its output, which raises eyebrows on its financial reserves until 2026.

Munster changed the focus of his Apple future predictions to AI development. Investors shouldn’t place all of their faith in this for Rivian, though, since the market for EVs is still questionable.

Layoffs Are Up Ahead

What comes after a poor Q4 performance and a stock nosedive? RIVN stock answers this with a plan to lay off 10% of its salaried staff, affecting about 150 Bay Area workers. Palo Alto’s job cuts will start on April 23.

Rivian CEO RJ Scaringe faced backlash for completely blindsiding staff. The reason? Announcing the layoffs through email. Rivian may be reporting a whopping $5.4 billion loss in 2023. And for 2024? $2.7 billion.

The $70,000 R1T pickup and $75,000 R1S SUV added color to Rivian’s lineup. To cut expenses, it plans to close a factory in Illinois and change the engineering of vehicles. CEO Scaringe pledged to promote the use of EVs while being confident in the face of economic difficulties

Elon Musk Sees Bankruptcy

 Elon Musk, the CEO of Tesla, made it known that high-volume production with positive cash flow isn’t just resolved with a decent product design. Thus, Musk alerted Rivian that the company may declare bankruptcy in six months. Therefore, Rivian should lessen costs and have its executive team be in the factory to prevent failure.

Avoid RIVN Stock

Rivian saw some early gains, but its stock seems to rebound slowly. Issues facing the EV sector might only go away once the macroeconomy stabilizes. For Rivian to succeed, it must increase production, cut losses, introduce new models, and set eyes for gross profit in 2024.

To prevent more future losses, steer clear of RIVN’s current direction.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

Article printed from InvestorPlace Media, https://investorplace.com/2024/03/rivn-stock-forecast-what-will-it-take-for-rivian-to-turn-things-around/.

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