Mark your calendar and then run for the hills! That’s actually not a bad strategy if you’re considering investing in Rivian Automotive (NASDAQ:RIVN). We have major concerns, as an upcoming event could negatively affect Rivian stock. Not all rallies are good news. Sometimes, they can be “trap doors” that end up causing steep financial losses.
Rivian stock provides a textbook example of this. It’s down by approximately 87% over the past five years. Every rally was sold off after a while. This doesn’t necessarily mean the recent Rivian share-price pop will also be sold off, but investors should definitely be on high alert.
Don’t Overlook Rivian’s Problems
Even if Rivian Automotive’s shareholders enjoyed a quick rally recently, this doesn’t mean Rivian is problem-free.
For example, according to an OilPrice.com report, people who bought Rivian R1T electric trucks “on the secondary market after the initial launch” might not be thrilled in mid-2024.
That’s because the prices of those vehicles “have plunged by about 50% from the spring of 2022 to the present day.” Thus, it appears that early-hype-phase buyers of Rivian Automotive’s electric trucks are getting punished.
Meanwhile, Rivian’s production pace is in a state of decline. As InvestorPlace contributor Chris MacDonald observed, Rivian Automotive produced 9,612 vehicles so far in 2024’s second quarter. This result, MacDonald noted, represents a “45.4% decline in production.”
It also signified the “second consecutive quarter of reduced output,” with Rivian having produced 17,541 vehicles in 2023’s fourth quarter. Furthermore, Rivian Automotive only produced 23,592 vehicles in the first half of 2024, “falling short of its 2024 target by nearly 33,500 cars.”
Mark This: Rivian Faces an Imminent Earnings Event
To the aforementioned problems, we can add that Rivian is a consistently income-negative company. A Barron’s report stated outright, “Profits aren’t expected for years” for Rivian Automotive.
Even a money-bleeding business can come into the market’s good graces from time to time. Rivian stock rallied not long ago, probably because of high hopes for the company’s second-quarter 2024 financial report.
Mark your calendar, as Rivian Automotive expects to release its Q2-2024 financial results on Aug. 6. The market engaged in some front-running because some stock traders assumed that Rivian’s quarterly results will be outstanding.
Why would they assume this? We already pointed out Rivian Automotive’s problems, including the automaker’s falling production stats. However, for what it’s worth, Rivian delivered 13,790 vehicles in 2024’s second quarter, above the company’s guidance of around 13,200 vehicles.
That’s not a massive beat, by any means. Based on Rivian Automotive’s subpar financials, the company should still be a “show-me” story to prudent investors. Hence, Rivian stock is vulnerable to a pullback in the wake of a potentially overdone pre-earnings rally.
Rivian Stock: Chasers Could Get Punished
Rivian Automotive, its long-term shareholders and even some of its vehicle buyers have faced problems. Nevertheless, hopeful Rivian investors pushed up the share price ahead of the upcoming financial report.
Baked-in optimism and Rivian Automotive’s less-than-ideal financials are a dangerous combination for investors. So, feel free to mark Aug. 5 on your calendar and then watch from a safe distance. Rivian stock is vulnerable to a disappointing drawdown, and you don’t have to be involved if and when it happens.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.