Rivian Posts Positive News, Stock Price Drops

Rivian’s second quarter financials and shareholder call this week came with some good news. Naturally, that means the stock price is down. (Sorry, Rivian stock holders.) I’ll come back to that at the end. Followup interviews have also brought positive news.

First, let’s just do a quick bullet list of some of the good news:

• The Rivian R2 Launch variants are much more popular than the company expected. “We had our own set of projections as to what we thought the conversion [rate] would be for those Launch variants, and it’s meaningfully higher. So the conversion rate is much higher than our own internal expectations, which is fantastic,” RJ Scaringe said.
• The company bumped up its full-year financial guidance. (One would think it’s a good thing if a company’s financial guidance changes in a positive way, no?)
• Rivian’s Q2 revenue totaled $1.66 billion, which was significantly higher than the $1.52 billion Bloomberg consensus. It was also up 27% year over year.
• The company’s adjusted loss per share was $0.63, which was better than the expected $0.76. Its adjusted EBITDA loss was $379 million, compared to the expected $548 million and compared to the $472 million of Q1. That was also down from last year’s $667 million adjusted EBITDA loss.
• Rivian also scored a $179 million gross profit in Q2. Meanwhile, the automotive segment’s gross profit loss dropped from $62 million in Q1 to $36 million in Q2.
• Consolidated gross margin rose from 9% in Q1 to 11% in Q2.
• Earlier in July, Rivian increased its full-year delivery guidance from 62,000 vehicles to 67,000. That was backed up with a 65,000–70,000 estimated delivery total. (22,559 vehicles were sold in the first half of the year, leaving about 44,441 to be sold in the second half of the year.)
• “So we’ve said publicly in the past, we’ve been continuing to guide towards this, which is we’ll get to positive gross margin on R2 by the end of this year,” Scaringe also said.

So, why is the stock price down with all of this good news? One reason is seemingly the equity raise the company recently held. That dilutes existing stock and seems to have damaged the stock price. There’s also a lawsuit, but with a somewhat counterintuitive or surprising result. “Rivian filed a lawsuit in the U.S. Court of International Trade, seeking refunds on tariffs it paid after a Supreme Court ruling. If RIVN wins, that is extra cash. But the stock still fell about 3.9% on the news, another sign that traders see headline risk first, potential upside later,” as one news outlet says. I mean, it makes sense, but it’s also sort of a weird result if there’s simply the potential Rivian gets more cash. And why not try to get that cash back if it can?

“For active traders, the message from recent action is clear: dilution and headline risk are driving the tape. The multi-week slide from $20.14 to the mid-teens, plus intraday lower highs on the 5-minute chart, show sellers in control. Add the modest Morgan Stanley target hike to just $13 with an Underweight rating, and you have a name where big funds are still cautious. The tariff-refund lawsuit only adds another wildcard that RIVN traders need to track.”

“Investors are reacting to lingering concern over automotive gross margin, which remained negative (around 3%), and ongoing operational cash burn,” another news outlet writes.

Hmm…. It’s an interesting stock and company, that’s for sure.