Hope springs eternal for electric vehicle manufacturer Rivian Automotive (NASDAQ:RIVN), but as the old saying goes, hope isn’t a viable investment strategy. Even if Rivian Automotive’s management sees the glass as half-full, the confirmed data doesn’t bode well for RIVN stock in 2023.
Speaking of confirmed data, it’s indisputable that Rivian Automotive has been an income-negative business, quarter after quarter.
It’s also known that Rivian’s long-term shareholders have experienced steep losses. In the final analysis, they shouldn’t count on a comeback as Rivian Automotive’s vehicles might be flashy and powerful, but they’re not strong sellers.
| RIVN | Rivian Automotive | $14.15 |
Ambitious Goals, but Lackluster Sales
Which do you base your investments on: management’s goals, or actual data? Personally, I choose the established data because sometimes a company falls short of its stated objectives.
This isn’t just a philosophical question, as it applies directly to Rivian Automotive. Apparently, the company’s management likes to propose ambitious EV production goals.
For instance, Rivian Automotive Chief Financial Officer Claire Rauh McDonough reportedly expects the company to produce 400,000 R2 SUVs every year, starting in 2027.
Remember, Rivian Automotive only produced 9,395 vehicles during this year’s first quarter. Yet, despite a 6% workforce reduction, Rivian’s management decided that the company “remains on track” to produce 50,000 vehicles this year.
Ultimately, selling vehicles is just as important as producing them, if not more so. On that topic, McDonough has evidently “seen really a stable environment throughout the course of this year from a demand vantage point.”
But again, the management’s optimism isn’t confirmed by the data, as Rivian Automotive only delivered 7,946 vehicles in Q1 of 2023.
A Big Problem for RIVN Stock
Now, we must shift gears to a news item that’s going to bother some Rivian Automotive fans and investors. Presciently, JPMorgan analyst Min Moon predicted Rivian would be kicked off of the Nasdaq 100 index in June. That prediction came to pass.
Rivian Automotive will officially be removed from the Nasdaq 100 index, effective June 20. Most likely, this removal is based on Rivian Automotive’s deteriorating market capitalization. Currently, Rivian’s market cap is around $14 billion.
A $14 billion market cap doesn’t make Rivian Automotive a “micro-cap” startup company. However, it’s indicative of the automaker’s fall from grace. As you may recall, RIVN stock briefly traded above $170 in late 2021.
Back then, financial traders were seemingly eager to bid up the share price of anything and everything related to EVs.
Those heady days are in the rear-view mirror now. Consistently unprofitable “zombie” companies aren’t in favor anymore.
Besides, a prestigious index like the Nasdaq 100 only has room for the biggest and best technology-related companies. Clearly, Rivian Automotive doesn’t make the cut anymore. Probably, it never really did.
Don’t Wait Around for a RIVN Stock Comeback
It’s fine to monitor Rivian Automotive’s progress (or lack thereof) from a safe distance. Maybe, Rivian will meet its EV production goals and impress Wall Street with blockbuster vehicle delivery numbers.
Or, maybe not. Instead of focusing on the high hopes of Rivian Automotive’s management, I recommend sticking to the confirmed facts. With that in mind – and understanding the significance of getting booted from the Nasdaq 100 – investors definitely shouldn’t count on a comeback with RIVN stock.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.