Rivian Stock Tumbles As EV Maker Hikes Prices Ahead Of Earnings

Electric-vehicle maker Rivian (RIVN) will report fourth-quarter and full-year 2021 results late Thursday, amid production woes and a price-hike fiasco that rankled customers. Rivian stock sank on Monday.

Rivian increased the prices of its vehicles up to 20% last week. CEO R.J. Scaringe blamed rising component costs. Meanwhile, production ramp-up has been choppy, with Rivian’s Normal, Ill., plant shutting down for a week in early January.

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Rivian Earnings

Estimate: Zacks Investment Research analysts expect Rivian to trim losses from the last quarter to $1.58 per share on sales of $50.38 million.

Rivian reported a little revenue in Q3, but steep losses. Sales came in around $1 million and losses were $12.21 per share. Those results were in line with what the company said it expected in a previous SEC filing.

It’s not unusual for a startup to have little revenue and big losses initially, as it spends heavily on ramping up and tweaking production. Rivian says it doesn’t expect to be profitable for the foreseeable future.

Results: Check back Thursday after the close.

Rivian Stock

Shares plunged 10.5% to 42.43 on the stock market today. Rivian stock is trading well below its IPO price.

The stock’s relative strength line is at an all-time low, according to MarketSmith.  Rivian’s RS Rating is 7 out of a best-possible 99.

EV stocks have taken a hit in recent weeks amid a market rotation away from growth stocks. Russia’s war in Ukraine has added further pressure overall.

Among Rivian’s U.S.-based rivals, luxury EV startup Lucid (LCID) was up 2.4%, after losing more than half its value since mid January.

Tesla (TSLA), which got the green light to open its Berlin factory last Friday, fell 4%.

Among legacy automakers with a growing slate of EVs, General Motors (GM) sank 6.1% and Ford (F) lost 5.2%. Stellantis (STLA), which inked a deal on Jan. 5 to make electric delivery vans for top Rivian customer Amazon (AMZN), tumbled 8.4%.

Rivian Price Hikes

Last week, Rivian revealed that its R1T electric pickup will cost about 17% more than previously expected. That would increase the base cost to about $78,975 from $67,500. The price of the R1S SUV will jump about 20%, bringing the new base price to about $84,000 from $70,000. All prices are before federal tax credits of $7,500.

The previous price points will apply to dual-motor versions of both the R1T and R1S, which are expected to be available starting in 2024.

The new prices originally applied to both new and existing reservations, angering customers with reservations who threatened to cancel their pre-orders.

As a result, on March 3, Rivian reversed its decision to apply the price increases to existing orders. In a note to Rivian pre-order holders, Scaringe said the company had “wrongly assumed the announced Dual-Motor and Standard battery pack would provide configurations that would deliver price points similar to your original configuration.”

“While this was the logic, it was wrong and we broke your trust in Rivian,” he added. Scaringe apologized and offered not only to honor pre-orders at the original price but also help those who canceled to reinstate their pre-order at the original configuration, pricing and delivery time.

RIVN stock fell 25% in the two days after the price hikes were announced.

Rivian Stock: Production Ramp-Up Woes

Scaringe said at a Wolfe Research conference on Feb. 24 that production ramp-up at Rivian’s Normal plant is “absolutely making progress,” but supply-chain issues are still slowing production.

Scaringe said the global semiconductor chip shortage is the “most painful” constraint in ramping up production.

The company said on Dec. 16 that it expected to be “a few hundred vehicles short of our 2021 production target of 1,200.”  On Jan. 10, Rivian reported it had sold 1,015 vehicle by the end of 2021 and delivered 920.

Rivian said it had around 71,000 preorders for its R1T pickup and R1S SUV in North America as of Dec. 15. Preorders require a $1,000 refundable deposit.

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.

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