When Rivian (RIVN) posted revenue on December 17, markets reacted badly. And it should. The electric vehicle stock enjoyed a market capitalization of over $100 billion before the report.
Speculators cannot justify the $1 million in quarterly revenue against $100 billion in market cap. Furthermore, Rivian lost $12.21 a share. Its highlights are only that of promises and forecasts. The firm received 71,000 in R1 net preorders in the U.S. and Canada as of Dec. 15, 2021. It has 100,000 in initial EDV orders from Amazon (AMZN).
On supply preparation, it has a net planned capacity of 200,000 in its Illinois factory and 400,000 annually at its Georgia facility.
Rivian has plenty of cash to cover the massive expenses ahead. Thanks to investor money through an IPO, it raised $13.7 billion. In the quarter, it lost $776 million from operations. Losses will continue for many quarters as output increases. Just as Tesla (TSLA) lost money for years, Rivian will, too. Investors need to set a production unit target first. Revenue from unit sales must exceed the total cost before the company earns a profit. Until then, bullish speculation is the only near-term lift for the stock.
Consider RIVN stock as a post-earnings trade after the drop. Its stock price after that is random. It has no future profit trends investors may use to estimate a fair value.
