Even after announcing another round of job cuts, Rivian Automotive (NASDAQ:RIVN) stock is rising today. In February 2024, the electric vehicle (EV) producer reduced its salaried workforce by 10%. Yesterday, it announced plans to lay off even more workers. This time around, though, the Rivian layoffs are much less significant. Only 1% of its jobs are being eliminated in a clear attempt to reduce costs as the EV market continues to struggle.
But this news isn’t impacting RIVN stock, which has been rising since markets opened. If investors were worried about the newest round of job cuts, they likely have no reason to be.
A Closer Look at the Rivian Layoffs
It’s not unreasonable to flinch at the news that Rivian is laying off more workers. The company has opted for three rounds of job cuts in the past year. However, it is important to note that the most recent round of Rivian layoffs is so small that it is barely worth considering as part of an investment thesis. A single percent of its workforce is a tiny number and can likely be written off as part of a restructuring initiative that could help streamline operations. As Reuters reports:
“Reducing cost is crucial for Rivian as high interest rates to rein in inflation have hurt consumer demand for EVs that are typically more expensive than their gas-powered counterparts.
Rivian has been reducing costs by building some parts in house and re-negotiating supply contracts. It has also shut down its production line for an upgrade to increase efficiency and help reduce cost.”
With this focus on growth through efficiency, it makes sense that Rivian would be taking steps to reduce its workforce. Operating in today’s EV market isn’t easy. Competition is rising, and demand remains complicated. But RIVN stock has been on a winning streak over the past two days. While this momentum is likely partially due to short squeeze speculation, it’s also possible that Rivian is finally starting the turnaround for which it is due.
The latest Rivian layoffs could end up helping usher in a new era for this company. Some experts are likely still skeptical, given how much RIVN stock has fallen over the past few months. But the fact that shares are up today shows that Rivian’s job cuts aren’t impacting it negatively.
On the date of publication, Samuel O’Brient 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.
