Rivian (RIVN) Shares Fall 10% as Q4 Deliveries Decline Q/Q

Zacks Equity Research

3 January 2024 at 10:24 am·3-min read

Shares of electric vehicle (EV) maker Rivian Automotive RIVN lost around 10% yesterday after the company reported a sequential decline in vehicle deliveries during the fourth quarter.

Rivian produced 17,541 EVs during the fourth quarter, up from 16,304 units produced in the third quarter. However, the company delivered 13,972 vehicles to customers, reflecting a 10.2% decline in deliveries from the third quarter. This unexpected drop in deliveries after consistent growth in the first three quarters of 2023 might indicate potential softening demand for Rivian's premium EVs.

The decline in deliveries raises concerns about the demand for Rivian's high-priced EVs, a challenge faced by several automakers in the industry. Slowing demand for premium EVs has compelled many companies to either scale back production or reduce prices to remain competitive. Rivian, so far, has managed to avoid price cuts but the recent delivery dip may necessitate a reassessment of this strategy.

Rivian's path to profitability continues to be hindered by the high cost of building its vehicles. The average selling price for its consumer R1T and R1S vehicles exceeds $80,000. However, the cost of production far surpasses the revenues generated. In the second quarter, the company incurred a loss of $32,495 on each vehicle produced. While Rivian has made efforts to narrow this per-unit loss by simplifying its product portfolio and reducing material and labor costs, cutting the sticker price could further squeeze profit margins.

On a full-year basis, Rivian exceeded its 2023 production guidance, producing 57,232 vehicles and delivering 50,122. Despite this achievement, the challenges in the fourth quarter raise questions about the company's strategy moving forward.

Rivian's announcement of its fourth-quarter earnings on Feb 21 will be closely watched for insights into its plans to address the decline in deliveries, potential adjustments to pricing strategies and efforts to achieve profitability.

Rivian currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked players in the auto space are Toyota TM, PACCAR PCAR and Nio inc. NIO, each carrying a Zacks Rank #2 (Buy).

The Zacks Consensus Estimate for TM’s fiscal 2024 sales and EPS implies year-over-year growth of 11% and 45%, respectively. The earnings estimate for fiscal 2024 and 2025 has been revised upward by $1.98 and 5 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for PCAR’s 2023 sales and EPS implies year-over-year growth of 20.5% and 56%, respectively. The earnings estimate for 2023 and 2024 has been revised upward by 6 cents and 15 cents, respectively, in the past 60 days.

The Zacks Consensus Estimate for NIO’s 2024 top and bottom lines implies year-over-year growth of 51% and 28%, respectively. The consensus mark for the company’s 2023 and 2024 loss per share has been narrowed by 14 cents and 13 cents, respectively, in the past 30 days.

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