Warning! The Rivian Stock Slump May Not Change Anytime Soon.

Stocks to sell

The Rivian (NASDAQ:RIVN) stock outlook has become even more bleak after the company revealed its latest earnings. Despite its stronger position compared to Lucid Group (NASDAQ:LCID) and Mullen Automotive (NASDAQ:MULN), the company has challenges. The roughly 15% post-earnings slump suggests declining prospects. The question is whether this trend will reverse.

Rivian announced layoffs. The company laid off 10% of salaried workers because of low EV demand and economic uncertainties. The company’s stock dropped 27.4% with 81 million shares traded in a day, far surpassing its 33.7 million average. 

RIVN Stock and Disappointing Earnings

Rivian Automotive reported a Q4 loss of $1.58 per share, a 14% pre-market dip, and a lower 2024 production forecast. It caused Rivian to get knocked down 14% in pre-market sales. Sales saw its expectations eye-to-eye at $3.1 billion. The electric carmaker’s projected production of 57,000 vehicles is below what analysts seek.

Rivian’s 2024 adjusted EBITDA is looking to be $2.7 billion, slightly higher than expected because of the economic uncertainties and high-interest rates. On the other hand, CFO Claire McDonough sees modest growth in consumer and commercial deliveries coming up.

Rivian slashed its workforce by 10% to boost efficiency in the EV market. Rivian will open doors to the R2 SUV next month to expand its market reach from its starting price of $75,000.

UBS analyst Joseph Spak downgraded RIVN stock from “buy” to “sell” because of changing EV market dynamics, cutting the price target from $24 to $8. It points to a potential 30.1% drop from the prior close and highlights the hurdles on Rivian’s path to profitability.

UBS analyst referred to the shifting EV landscape making waves in demand and profitability, which caused Rivian to be downgraded and ultimately resulted in a 9% fall in shares.

Gearing Up for R2

Rivian is set to drop the curtains on the Rivian R2 on March 7. This unveiling will also include European availability and pricing details. The price for the R2 will be between $40,000 and $60,000.

The R1T and R1S base models from Rivian were cut by about $3,100, coming down to $71,700 and $76,700 per unit. The R2 is poised to be more affordable, with tax incentives expected under the Inflation Reduction Act. The curtain drop is set at the Rivian Theater in Laguna Beach.

Steer Away from RIVN Stock

The company’s post-earnings dive may underestimate concerns since results fell short with higher losses than expected. Guidance for 2024 missed the mark on forecasts, a sign of stagnant growth and distant profitability.

Rivian is a company that’s seeing tremendous downside selling pressure, and analysts revisions lower. Until the EV market shows signs of life, and investors show an appetite for a growth story again, I think RIVN stock is one investors may simply be better off avoiding for now.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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