Rivian Hammers Troubled Investors

By Douglas A. McIntyre Published Oct 6, 11:30AM EDT

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Rivian Hammers Troubled Investors — © Courtesy of Rivian

It is difficult to drive the price of a horrible company’s stock down sharply. Trouble should be priced into its shares already. However, Rivian Automotive Inc. (NASDAQ: RIVN | RIVN Price Prediction) was able to pull off the trick. When the electric truck maker said it would raise money, its stock promptly dropped 20%. That also puts it down 50% in the past year. (These are the 13 biggest electric vehicle business failures in American history.)
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Why Rivian Needs More Money

Rivian announced the sale of a convertible security with proceeds of $1.5 billion. It is a sign that Rivan knows it does not have enough money to survive with its current balance sheet. These bonds can be converted to cash or common stock, meaning today’s shareholders could be horribly diluted. The punishment was fair, based on the math.
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Rivian’s cash burn looks like a dumpster fire. According to CNBC, “Rivian also estimated that it had cash and equivalents of $9.1 billion as of Sep. 30, down from $10.2 billion at the end of the second quarter.” It takes a special skill to lose that much money. In an SEC filing, Rivian said it posted between $1.29 billion and $1.33 billion in the September quarter. (It lost $8.2 billion in the five quarters that ended in June.) Rivian Chief Executive Robert Scaringe says its cash pile will last through 2025. What happens then?
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Rivian is known for its outrageously priced vehicles, some of which approach a manufacturer’s suggested retail price of $100,000. It is up against Ford and its F-150 Lightning, Ford’s electric vehicle flagship. Ford has millions of gasoline-powered F-150 vehicles on the market, giving it a huge base to which to market the Lighting.
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Tesla will come out with its Cybertruck at the end of the year. Tesla says it has a waiting list of 2 million people. Although many will not buy the truck, it is a sign of at least brisk demand.

Rivian has disappointed investors over and over again. It cannot stop itself.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.