Rivian Waves a Red Flag for RIVN Stock Investors

  • Rivian Automotive (RIVN) fell short of its expected full-year 2022 EV production result.
  • Rivian’s dwindling cash supply and factory closures are problematic.
  • Investors should be wary of RIVN stock, even if the share price looks cheap.
RIVN stock - Rivian Waves a Red Flag for RIVN Stock Investors

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Folks who held shares of Rivian Automotive (NASDAQ:RIVN) stock had a rough ride last year. Will 2023 be any better? The outlook is dim, and perhaps a bit grim, as Rivian’s cash position isn’t ideal.

Plus, supply chain disruptions could continue to cause problems for the automaker. Frankly, you probably won’t want to load up on RIVN stock after learning about Rivian’s disappointing vehicle production result.

Even if Rivian designs EVs that are sleek and powerful, that’s not enough in the 2020s. There’s a lot of competition in the EV space, so Rivian can’t afford to have any major issues right now.

Yet, Rivian is struggling with the same factors that other EV manufacturers are dealing with: high inflation, high interest rates, difficulty in sourcing components and so on. If Rivian can’t improve its financial and operational problems soon, the company’s investors could face further losses.

RIVN Rivian Automotive $16.96

RIVN Stock Rose Despite Disappointing Production Total

It’s rather unsettling when financial traders buy up a stock despite a disappointing operational result. When this happens, it’s time for investors to be careful, not hasty.

Here’s a case in point. Not long ago, Rivian disclosed that it produced 10,020 vehicles and delivered 8,054 vehicles during the fourth quarter of 2022. Additionally, the automaker revealed that it produced 24,337 vehicles and delivered 20,332 vehicles during the full year of 2022.

Rivian fell short of its 25,000-vehicle production target for the year. Nevertheless, RIVN stock ran higher, possibly because it wasn’t a huge miss. The vehicle production target miss wasn’t the only problem, though.

In an e-mail message sent to employees, Rivian CEO R.J. Scaringe admitted that 700 vehicles were still awaiting parts or needed other work done at the end of 2022. Furthermore, the chief executive pointed to supply chain issues as the reason why Rivian missed its production target.

Rivian’s Factory Closures and Capital Position Raise Concerns

Speaking of disruptions caused by supply chain constraints, it’s alarming to learn that in 2022, Rivian’s production factory was closed for 20 days. That same factory also shut down early for an additional 50 days last year, Scaringe reported.

Those closures weren’t revealed in Rivian’s most recently published press release. WSJ covered the story, though, while also stating that Rivian had only $13.8 billion in cash and cash equivalents at the end of September.

That might sound like a sizable capital position, but here’s the context. Rivian’s balance of cash and cash equivalents was $15.46 billion at the end of June. This should be considered a red flag for prospective investors – not necessarily a deal-breaker, but certainly something worth noting.

What You Can Do Now

RIVN stock lost a lot of value in 2022, and the downtrend could persist this year. For the time being, it’s wise to just watch Rivian and see if the company’s future financial and operational results show improvement.

Don’t misunderstand – Rivian isn’t an “F” type of company and the EV industry has potential overall. The company’s shares get a “D” rating for the time being, though, as there’s no clear indication yet that Rivian will overcome its challenges in the near term.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.

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Article printed from InvestorPlace Media, https://investorplace.com/market360/2023/01/rivian-waves-a-red-flag-for-rivn-stock-investors/.

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