Rivian (NASDAQ:RIVN) stock is worth watching ahead of earnings. Rivian’s last earnings report showed promising revenue growth but was followed by a sharp stock decline. Multiple layoffs and negative sentiment from Wall Street have contributed to investor concern ahead of the May 7 report.
The company had two layoffs this year and delayed a factory opening in Georgia. Job cuts may increase due to low sales. Rivian loses money on each of the 13,980 EVs produced in Q1. Investors want to know how much money the company is losing and when it will break even. Consider these factors for the top EV stock before its earnings report.
May 7 Earnings Report and RIVN Stock
As Rivian prepares to release its earnings report, investors debate whether RIVN stock is worth buying before May 7.
Despite recent challenges, a number of investors have highlighted positive factors for the company. These include efficiency measures such as layoffs which should improve margins, and a positive reception for the company’s new R2 model.
Rivian ended 2023 with $10.4 billion in cash reserves, significantly higher than many other EV startups, providing a solid financial foundation. This surplus, highlighted by many who follow the EV maker in this space, is crucial for Rivian to expand.
That’s especially true, as the company’s new models gain attention and Rivian captures market share. The EV sector is also expected to rebound in 2024, according to The Economist, positioning RIVN stock well for future growth.
That said, it’s also true that Rivian’s losses per vehicle aren’t acceptable for most investors. he company’s steady progress certainly suggests the company is moving in the right direction. But cash burn concerns will put a higher-than-normal emphasis on this number in the upcoming print.
The Silver Lining
Despite recent challenges, RIVN stock received a boost as Amazon (NASDAQ:AMZN) emerged as the largest private operator of EV charging stations in the U.S. This is significant because Rivian supplies Amazon with electric delivery vans, crucial for Amazon’s goal to achieve net zero emissions by 2040.
While Amazon ordered 100,000 vans from Rivian in 2019, only a fraction have been delivered due to infrastructure limitations.
With Amazon deploying 17,000 chargers across 120 warehouses, more EDVs are expected to hit the roads. Amazon’s substantial ownership stake in Rivian and its open-door approach to other companies signals a promising future for Rivian’s EDVs.
Rivian’s Q1 sales are expected to surge by 59%, outpacing the overall EV market, with 13,980 vehicles produced and 13,588 delivered. The R1S was the fourth top-selling EV, and the new R2, priced at $45,000, garnered over 68,000 reservations within 24 hours.
Keep Your Stakes Low
Investors banking on Rivian’s success are eyeing its R2 model and upcoming R3 crossover SUV. With the stock near all-time lows, some see an opportunity. Rivian’s electric delivery vans promise revenue and use of production capacity, cushioning slumps in consumer sales.
Overall, Rivian does look like an intriguing speculative bet in this sector, given where valuations for other top names are right now.
However, it’s my view that this is a stock that carries with it higher-than-average risk, particularly heading into earnings. Cash burn concerns are real, and the company will need to show significant improvement in its gross margins before many investors step into this name. I’m one such investor right now.
Accordingly, I’m taking a cautious approach when it comes to RIVN stock right now. This is an EV maker with an uncertain future. And while the company has some pretty impressive partnerships, it’s simply not growing fast enough to justify its cash burn, at least yet.
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.