RIVN

Rivian Stock Plunges 26% on 2024 Production Guidance That Stalls at 2023 Level

Shares of Rivian Automotive (NASDAQ: RIVN) plummeted 25.6% on Thursday, following the electric vehicle (EV) maker's release on the prior afternoon of its fourth-quarter 2023 report.

The stock's decline is largely attributable to management issuing 2024 production guidance that's only in line with the number of vehicles the company produced in 2023. Rivian cited "economic and geopolitical uncertainties and pressures, most notably the impact of historically high interest rates" for its cautious 2024 production outlook that, no doubt, disappointed many investors.

The fourth-quarter's headline numbers were roughly as expected by Wall Street. Revenue was slightly higher than the analyst consensus estimate, while the adjusted loss per share was a little wider than it.

As background, Rivian makes two all-electric vehicles for consumers: the R1T (a pickup truck) and R1S (an SUV). It also produces an electric delivery vehicle, which until last November was only available to Amazon, which owns a sizable stake in Rivian.

Below is an overview of Rivian's Q4 2023 and 2024 outlook, centered around 10 key metrics.

1. Revenue jumped 98% year over year

In Q4, Rivian's revenue was $1.32 billion, which surpassed the Wall Street consensus estimate of $1.26 billion. This result was up 98% from the year-ago period, but down 2% from the prior quarter. Revenue was primarily generated from vehicles delivered in the quarter.

2. Produced 17,541 vehicles, up 8% from the third quarter

In the fourth quarter, Rivian produced a total of 17,541 vehicles, up 8% from the prior quarter. Also during Q4, the company delivered 13,972 vehicles, 10% fewer than the number in the third quarter.

Year-end seasonality associated with the holidays is the reason that production rose sequentially, while deliveries declined.

3. Continued rollout of Amazon's 100,000 delivery vans

Rivian continues to fulfill Amazon's initial order of 100,000 custom-designed electric delivery vans (EDVs). The company doesn't disclose its production and delivery numbers for these vehicles. However, it did say in its shareholder letter that "the portion of our total revenue attributed to Amazon was 8% in the fourth quarter of 2023 as compared to 30% in the third quarter" due to Amazon's expected seasonality.

And last quarter, it shared that Amazon had more than 10,000 EDVs in its fleet.

4. Operating loss narrowed 12%

Loss from operations was $1.58 billion, which is 12% narrower than the operating loss in the same period last year.

5. Adjusted loss per share narrowed 21%

The reported net loss was $1.52 billion, or $1.58 per share, a 16% improvement from the year-ago quarter.

Adjusted for one-time items, the net loss was $1.31 billion, or $1.36 per share, a 21% improvement from the year-ago period. This result fell a bit short of the adjusted loss of $1.32 per share that Wall Street had projected.

6. Cash used in operations narrowed 23%

In the fourth quarter, Rivian used $1.11 billion in cash running its operations. This result is a 23% improvement from the year-ago period, but a 26% widening of the cash used in the third quarter.

Free cash flow was negative $1.41 billion. This outflow is 19% narrower than in the year-ago period, but 32% wider than in the prior quarter.

7. $9.37 billion in cash and cash equivalents at year end 2023

Rivian ended Q4 (and 2023) with $9.37 billion in cash, cash equivalents, and liquid investments, and $4.43 billion in long-term debt on its balance sheet.

At the company's current cash-burn rate of $1.41 billion per quarter, its cash balance would last about 6.6 quarters, or just over a year and a half. Relatively speaking -- that is, for an early-stage pure-play EV maker -- Rivian's liquidity position isn't too bad, but it's certainly something investors need to closely monitor.

8. Reducing salaried workforce by about 10%

As part of its initiatives to increase efficiency and cut costs, Rivian announced on Wednesday that it plans to lay off about 10% of its salaried workforce.

9. 2024 production guidance of 57,000 vehicles

Rivian expects to produce 57,000 total units in 2024. That's in line with the 2023 production level of 57,232 vehicles. For context, in 2023, production increased 135% year over year.

Management also guided for 2024 adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) to be negative $2.7 billion. For context, in 2023, this metric was negative $3.99 billion.

10. R2 SUV will be unveiled on March 7

On March 7, Rivian plans to reveal its mid-size SUV, R2. This vehicle is "designed to achieve a considerably lower price point and cost structure," the company said in its shareholder letter.

2024 production outlook is disappointing, but not surprising

In short, Rivian turned in a decent Q4 report, but disappointing 2024 production guidance. That said, the company's cautious outlook shouldn't come as a surprise given the state of the EV market, whose growth rate has slowed over the past year or so due in large part to macro issues, namely high interest rates.

On a positive note, the company expects to achieve a "modest" gross profit in the fourth quarter of 2024.

Reiterating what I wrote in item No. 7, "Relatively speaking -- that is, for an early stage pure-play EV maker -- Rivian's liquidity position isn't too bad, but it's certainly something investors need to closely monitor."

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. BA McKenna has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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