Rivian Automotive, Inc. (Ticker: RIVN) Financial Analysis: Do We Begin to Look Upward
Rivian Automotive (RIVN), a key player in the electric vehicle (EV) market, has faced significant bearish sentiment since its high-profile IPO in 2021. The stock has fallen over 80% from its peak due to concerns about supply chain issues, rising costs, and Rivian’s ability to scale production. At the start of 2023, the stock price dropped to under $20, a far cry from its previous high of $172. Despite these challenges, the company has maintained a strong partnership with Amazon, which ordered a substantial fleet of electric delivery vans, giving Rivian a unique edge in the corporate EV space.
In Q2 2023, Rivian reported revenue of $1.12 billion, a 147% year-over-year increase, reflecting its ability to ramp up production and deliveries. The company produced 13,992 vehicles and delivered 12,640 in the quarter, signaling progress toward its annual production goal of 52,000 units. While Rivian still posted a $1.2 billion net loss for the quarter, this was an improvement from the previous year’s $1.7 billion loss, and with $10.2 billion in cash reserves, the company has a strong liquidity position to support its expansion efforts.
Valuation metrics show that Rivian is trading at a price-to-sales (P/S) ratio of around 6.5, significantly lower than when it first went public, suggesting a more reasonable price point for investors. Analysts are now shifting their outlook, noting that Rivian’s massive 60% correction may have been overdone. Improving operational efficiency and plans for the smaller, more affordable R2 platform are key drivers of this newfound optimism. Some analysts using Elliott Wave Theory predict a potential bullish reversal as the stock approaches critical support levels.
Despite this optimism, risks remain. Rivian’s profitability timeline is uncertain, and external factors such as inflation and increasing competition in the EV market could impact its recovery. However, with growing revenues and analyst upgrades, Rivian may be on the cusp of a rebound, making it a potentially attractive opportunity for long-term investors looking to capitalize on a recovering EV market.
The Elliot Wave chart above shows that the RIVN has completed a 5 wave correction with a bottom around 8.365 region. From this low, RIVN has completed a 5 waves move towards 18.986 in what has unfolded as a Wave 1 labeled as (i)-(ii)-(iii)-(iv)-(v).
As the retracement continues, we are looking for a three wave correction off of the 18.986 high taking us towards 10.5 region for the completion of wave 2. Wave 2 may be deeper, however, it depends on the unfolding structure.
If this count is correct, then we should see further weakness to around the $10 region completing Wave 2.
