Rivian Automotive (NASDAQ: RIVN) didn't hit investors with any major surprises in the second-quarter update it released Tuesday night. But apparently, that was a problem for some who wanted more.
Rivian shares dropped sharply in early trading Wednesday. After bouncing back from a 10% fall, the stock was trading lower by 3.8% at 11 a.m. ET.
Demand and cost cuts are driving Rivian
Investors were disappointed with an adjusted loss that was bigger than the year-ago period's. But revenue was higher than in last year's second quarter, and the company has used less cash in operating activities in the first half of this year. That's notable because inventory was much lower, indicating demand is holding up for Rivian's electric vehicles (EVs).
Rivian said it still sees 2024 production of about 57,000 EVs and that it has maintained the lower capital spending level that it announced in its first-quarter report. The company ended the second quarter with about $7.9 billion in cash and equivalents and with more than $9 billion of total liquidity, including its revolving credit facility.
Management reiterated that the company will generate a positive gross profit in the fourth quarter, and this may be another reason Rivian stock pared its early losses this morning. The company may be able to achieve that since it has meaningfully cut production costs. The company says production costs for its existing R1 SUV are now 20% lower and that it will realize those savings starting in the second half of this year.
Rivian will also begin producing its next-generation R2 SUV next year for deliveries beginning in 2026. With a better cash position and cost cuts, today's drop may be a good opportunity for aggressive investors to add Rivian shares.
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Howard Smith has positions in Rivian Automotive. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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