RIVN Stock – EV Stocks Winners & Losers

EV stocks RIVN stock

Trying to grab a piece of the EV stocks market cake, Rivian Automotive, Inc. (NASDAQ: RIVN) is an EV manufacturer that went public back in 2021. However, RIVN stock has dropped 93% from its IPO until now. Ever-growing losses have led analysts to cut their RIVN price targets – adding to the bearish market sentiment. After TSLA’s poor Q1 guidance, EV stocks have been particularly hit and RIVN is no exception. But has all the risks/downside been priced into RIVN stock which now trades at $12? With no major upcoming catalysts to save it, RIVN stock price is likely still overpriced compared to other EV stocks considering that its EV competitors are valued at a discount compared to RIVN.

RIVN Stock News

In its Q4 earnings call, RIVN stated that it aims to produce 50,000 vehicles in 2022, but the company is still suffering from supply chain and capital issues which might be the reason for the company’s underwhelming production numbers in Q1 2023. However, the company is trying to raise its cash intake by revisiting the terms of its EV trucks exclusivity agreement with Amazon.com, Inc. (NASDAQ: AMZN) to bring in more customers.

EV Stocks Survivor

As of now, the EV stocks market overall is looking bearish, thanks to the biggest name in the industry Tesla, Inc. (NASDAQ: TSLA) stock price dropping following its Q1 earnings results. TSLA barely met analysts’ expectations due to raw material, commodity, logistics, warranty costs, and lowered revenues according to the company.

But the nail in the coffin was Elon Musk’s statement regarding the EV market’s uncertainty due to the current economic environment.

Inflation and the likelihood of a recession are affecting consumers’ discretionary spending – something that impacts all EV companies, not just TSLA. While Tesla is attempting to weather the storm by cutting its vehicle prices at the start of the year in an attempt to attract more customers, this environment will put pressure on EV startups like RIVN.

Unlike Tesla, RIVN increased its vehicle prices during 2022 and faces competition from the likes of Polestar Automotive Holding UK PLC (NASDAQ: PSNY), NIO Inc. (NYSE: NIO), Lucid Group, Inc. (LCID) and Mullen Automotive, Inc.(NASDAQ: MULN). The question on some investors’ minds right now is which of the EV stocks could survive.

Compared to PSNY, the company has been narrowing its losses after reporting a decrease in its net loss YoY from $1 billion to $465.8 million while RIVN’s losses widened from $4.6 billion to $6.7 billion. Additionally, RIVN is lagging in delivery numbers. RIVN delivered 20,332 vehicles to customers while Polestar delivered around 51,500 in 2022.

Despite these figures, RIVN stock is trading at nearly three times the price of PSNY indicating that RIVN could still be overvalued. Compared with another competitor RIVN’s delivery numbers are also falling behind that of NIO with the NIO delivering 122,486 vehicles in 2022 – more than 5 times those delivered by RIVN –  yet NIO’s stock is trading at nearly two-thirds the price of RIVN. This further indicates the possibility of RIVN being overvalued in contrast to other EV stocks.

Production and Capital Issues

Aiming to increase its production numbers by 105%, RIVN is expecting to produce 50,000 vehicles in 2023 and build a second plant to start producing a new series of vehicles for release in 2026. 

However, as a result of supply chain disruptions, RIVN still faces a great deal of production issues, especially due to the everlasting semiconductor shortage. 

Digging into RIVN’s Q1 2023 vehicle production and delivery numbers, the company’s production has declined in contrast to Q4 2022. RIVN produced 10,020 vehicles and delivered 8,054 vehicles in Q4 2022 while producing 9,395 vehicles and delivering 7,946 vehicles in Q1 2023. This QoQ decrease indicates that these supply chain issues could continue to impact production – ultimately affecting its sales and raising concerns about the company’s capital. 

This is not a good sign for a company burning through cash. In 2022 alone, RIVN spent $6.6 billion and after reporting a decrease in its cash position from $13.2 billion in Q3 2022 to $11.5 billion in Q4 2022, at this rate, it will have to raise capital in the future. Raising capital could dilute current shareholders, but with a cash runway of roughly 2.5 years based on its current expenditures dilution could still be a ways off. Additionally, its need to raise capital could be offset by revenue if it is able to pick up production during this time.

Amazon Exclusivity Deal

On this note, RIVN is attempting to raise its cash intake by seeking to adjust its exclusivity agreement with Amazon.com, Inc. (NASDAQ: AMZN). In 2019 RIVN made a deal with AMZN to exclusively deliver up to 100,000 EV delivery trucks over the next 4 years, obligating AMZN to purchase at least 10,000 trucks per year. 

Meaning RIVN cannot sell its trucks to any other company even though AMZN has barely ordered over 10,000 vehicles. While Amazon’s lack of enthusiasm for RIVN’s product is a bearish sign, loosening its deal with AMZN could help RIVN attract more customers and potentially secure more orders.

RIVN Stock Price Targets

Considering the bearish outlook, it is not surprising that analysts at The Royal Bank of Canada Capital Markets halved their price target for RIVN – cutting it to $14 and dropping its rating from outperform to sector perform. Moreover, Alexander Potter from Piper Sandler reduced his price target by 76% from $63 to $15. With RIVN’s net loss increasing YoY from $4.6 billion to $6.7 billion, these price cuts are hardly an overreaction, but investors may be wondering if there is more downside for the stock price.

Losing Eligibility for Tax Credits

Some investors got their answer after the Treasury Department released its long-anticipated battery guidance for federal EV tax credits. As a result of rules mandating that a certain amount of battery materials be sourced in the US, RIVN’s vehicles are no longer eligible for $7,500 tax credits. While they still qualify for half this amount, these rulings could affect demand moving forward.

RIVN Stock Q1 Earnings

RIVN is to report its Q1 earnings on May 9th after hours, where analysts expect the company to report revenue of $656.6 and an EPS of -1.61

RIVN Stock Financials

In its 2022 annual report, RIVN reported $17.8 billion in assets, including $11.5 billion in cash. RIVN witnessed a decline in assets from $22.2 billion including $18.1 billion in cash in 2021. RIVN’s liabilities grew YoY from $2.7 billion to $4 billion as its current liabilities increased from $1.3 billion to $2.4 billion. Additionally, the company’s long-term debt slightly increased YoY from $1.226 billion to $1.231 billion.

RIVN revenues grew YoY from $55 million to $1.6 billion, however, its gross loss widened from $465 million to $3.1 billion due to an increase in its cost of revenues from $520 million to $4.7 billion. Finally, the company’s operating losses increased YoY from $4.2 billion to $6.8 billion and its net losses increased from $4.6 billion to $6.7 billion.

Media Sentiment

@Gfilche is expecting RIVN and other EV stocks to fail.

Technical Analysis

EV stocks RIVN stock chart

RIVN trend is bearish as it is trading in a downward channel.

Looking at the indicators, RIVN stock is now trading below the 21 MA, 50 MA, and 200 MA which is a bearish sign. The RSI is approaching oversold at 31 and the MACD is bullish but is approaching a bearish crossover.

Fundamentally, RIVN has no major catalysts coming up apart from the upcoming earnings, but with analysts’ expectations being fairly low, RIVN stock price could fall even more following its earnings unless it exceeds these expectations.

EV stocks RIVN stock chart

The RIVN stock price has the potential to further decline as it is trading in a sideways channel below the 21, 50, and 200 MA, in addition to the MACD approaching a bearish crossover. A possible play would be going short with an entry on retests of the 21 MA and taking profits on retests of the lower trend line.

RIVN Stock Forecast

Following the recent bearish trend in the EV market due to Tesla’s underwhelming Q1 earnings and Elon Musk’s statement regarding the market situation, most EV stocks have been plummeting including RIVN – which has already been dropping since its IPO.

RIVN could be overpriced as the company lags behind in cutting losses and production numbers compared to PSNY – which is priced nearly three times lower- and lags behind in production numbers compared to NIO – which is priced at nearly two-thirds of the price of RIVN.

RIVN is still facing major production issues as the company’s Q1 2023 production numbers are falling behind in comparison to that of Q4 2022. Furthermore, RIVN’s capital issues aren’t slowing down with the company’s cash on hand continuously decreasing, causing the company to negotiate its exclusivity deal with AMZN to bring in more customers.

These factors resulted in many analysts and investors being bearish with most of them cutting their price target for the stock. And with the US treasury department’s new regulations regarding EV tax credits, RIVN could face more downside along with other EV stocks.

As it is set to report its Q1 earnings on May 9th, the RIVN stock price might decrease further following the event due to low analysts’ expectations, and with RIVN having no major upcoming catalysts, the RIVN stock forecast could remain bearish moving forwards making it one of the EV stocks to avoid.

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