Can Rivian Stock Cross the Electric Vehicle Death Valley?

Rivian (NASDAQ:RIVN) has lost 54% of its value in 2024. There are increasing concerns it can’t survive. Rivian stock is now worth just a little over twice its 2023 sales, or $10.7 billion. That’s still better than Ford Motor (NYSE:F) or General Motors (NYSE:GM), now trading at less than one-third their annual sales. Ford and GM are also profitable.

Rivian is not. Far from it. Rivian’s net loss for the first quarter, $1.45 billion, was less than its $1.24 billion of revenue. Updates are expected at a June 27 “Investor Day.”

Where’s the Hope?

There are a few reasons for hope.

One lies in the cars themselves. The R1 SUV and truck are much better than their Tesla (NASDAQ:TSLA) counterparts. A recent update gives the truck a range of 380 miles, 410 if you use the “Conserve Mode.”

The R1T also looks better than the Tesla Cybertruck. It looks like a truck. Car and Driver recently called the R1T “the hardest working truck in show business.” It goes from zero to 60 in under 3 seconds and can get 80% of its charge back in a little over a half-hour.

The price is the problem. It starts at $71,700 and goes up from there. It should be noted that the latest Ford F-150 costs about $85,000. The electric “Lightning” version of that truck costs $10,000 less.

But is the R1T worth $30,000 more than a new Kia EV9? Cars.com has trouble justifying it.

Rivian does have a clear plan to survival. It has moved production of its R2 line back to Illinois to conserve cash. The company produced 50,000 cars last year.

It claims it will have “positive gross profit” this year on the same production schedule. To make that happen it’s steadily letting go of salaried employees.

Rivian Risks

Despite good execution, especially compared with rivals like Lucid Motors (NASDAQ:LCID), or the late Fisker Motors, the risks of failure for Rivian remain high.

Rivian ended the first quarter with just $7.8 billion in cash and short-term securities. Even with a slower burn rate it will need more cash in 2025.

That may be hard to come by. Rivian already has $4.4 billion in debt, and the cost of debt today is high. Selling stock waters down existing shareholders.

It could ask for help from Amazon.Com (NASDAQ:AMZN), still taking delivery of 100,000 delivery vans ordered in the last decade. It could seek more help from Georgia Gov. Brian Kemp, who has staked his own political future on the company.

But CEO R.J. Scaringe is selling stock. Speculators at Stocktwits have turned neutral, and message volume is low. Analysts who once loved Rivian have run for cover. Half are now in the neutral or sell camp. The plaintiffs’ bar now complains investors were lied to.

The Bottom Line on Rivian Stock

Our Muslim Farooque still believes in Rivian. He cites “solid progress in ramping up delivery volumes and moving toward profitability.”

While EV growth has slowed, it hasn’t stopped. It’s up 10% globally, despite U.S. sales falling 1.5% from a year ago in the first quarter.

Much of the fall in U.S. EV sales came from Tesla. Reviews on the Tesla Cybertruck were brutal. I saw one in Atlanta recently and wouldn’t take one if you handed me the keys.

Tesla’s problems help Rivian, but only in theory. If you drop by to see one you’ll be impressed, but you may want to do some hard bargaining.

That’s the Rivian risk, right there. Nobody loves you when you’re down and out. If you’re betting on Rivian you’re betting a long shot.

But if it comes good in two years, if the Georgia plant does get built, you’ll be a genius.

As of this writing, Dana Blankenhorn had a LONG position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.