24/7 Wall St. Insights

• Rivian Automotive Inc.’s (NASDAQ: RIVN) long-term prospects are battering the stock.
• It is hard to imagine what good news it might have going forward.
• Also: 2 Dividend Legends to Hold Forever.

Rivian Automotive Inc. (NASDAQ: RIVN) stock rallied in late July and then gave up the improvement. The stock of the crippled electric vehicle (EV) company is down 50% so far in 2024. The brief hope of a turnaround has evaporated.

Morgan Stanley downgraded Rivian’s stock to Equal Weight, which usually translates into a low rating of Hold. However, the company’s long-term prospects are battering the stock.

The most recent disappointment was a deal with Volkswagen. Those who did not read the fine print believed the huge German car company had made a $5 billion investment. However, the deal explanation read, “Volkswagen Group to invest an initial $1 billion in Rivian, with up to $4 billion in planned additional investment for a total expected deal size of $5 billion.” VW is having deep trouble of its own, including its EV ventures.

Investors ignore promotions like the long “Shareholder Letter,” which primarily boasts about Rivian’s technology advances. The advances only matter if Rivian is in business, and it may not be for long.

In the most recent quarter, Rivian produced 9,612 vehicles and delivered 13,790. Its revenue for the quarter was $1.12 billion, compared with $1.2 billion the year before. A tiny EV company has to show it is growing. Its net loss for the period was $1.2 billion compared to $1.46 billion in the same quarter a year ago. Rivian’s burn rate is likely about $6 billion a year.

Rivian’s stock is down 50% so far this year. It operates in the troubled EV sector, and it is hard to imagine what good news it might have going forward.

3 Glaring Problems Facing Rivian

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