Shares of Rivian Automobiles (NASDAQ: RIVN) fell 7% in after-hours trading on Tuesday after the pure-play electric vehicle (EV) maker released its second-quarter 2024 report.

There was no clear, Rivian-specific trigger for the decline. The company’s revenue and profit beat analyst consensus estimates, and it reiterated its annual production guidance and expectation of modest gross profit in the fourth quarter.

The price drop is likely due to recent market volatility. As of August 6, S&P500 The index has fallen nearly 8% since its all-time high on July 16, and the technology-heavy Nasdaq-Composite is 12% below its all-time high on July 10. This volatility has likely reduced investor demand for riskier stocks like Rivian, which is not profitable.

For background, Rivian produces two fully electric vehicles for consumers: the R1T (a pickup truck) and the R1S (an SUV). The company also produces an electric delivery vehicle that is currently only available for Amazonwhich owns a 16% stake in Rivian.

Below is an overview of Rivian’s second quarter 2024 results and forecasts, focused on eight key metrics.

1. Sales increased by 3% year-on-year

In the second quarter, Rivian’s revenue was $1.158 billion, which came primarily from vehicles delivered during the quarter. This result beat Wall Street’s estimate of $1.13 billion. Revenue increased 3% compared to the same period last year and decreased 4% from the previous quarter.

2. 9,612 vehicles produced, 31% less than in the first quarter

In the second quarter, Rivian produced a total of 9,612 vehicles, down 31% from the first quarter. And the company delivered 13,790 vehicles, up 2% from the first quarter.

The sharp sequential decline in production volume and only a small increase in deliveries are not a cause for concern. These impacts were to be expected. Rivian’s production was impacted by plant shutdowns related to the retooling of its Illinois plant and the launch of its second-generation R1 vehicles.

3. Further expansion of Amazon’s 100,000 delivery vans

Rivian continues to fulfill Amazon’s initial order of 100,000 customized electric delivery vans (EDVs). The company does not disclose its quarterly production and delivery numbers for these vehicles.

4. Operating loss increased by 7% year-on-year

The operating loss was $1.38 billion, 7% higher than the operating loss in the same period last year.

5. Adjusted loss per share decreased by 7% year-on-year

Rivian’s reported net loss was $1.46 billion, or $1.46 per share, up 15% from the same quarter last year.

The story goes on

Adjusted for one-time items, net loss was $1.12 billion, or $1.13 per share, a 7% improvement from the same period a year ago. That result beat the $1.21 per share loss forecast by Wall Street.

6. Cash flow from operating activities improved by 45% year-on-year

In the second quarter, Rivian spent $754 million in cash to run its operations, a 45% improvement over the same period last year.

Free cash flow was negative $1.04 billion, a 36% improvement over the prior year period.

7. $7.87 billion in cash and cash equivalents at the end of the second quarter

Rivian ended the second quarter with $7.87 billion in cash, cash equivalents and liquid investments and $4.43 billion in long-term debt on its balance sheet.

The cash amount includes a $1 billion unsecured convertible bond issued by Rivian to Volkswagen with the announcement in June of the two companies’ planned 50-50 percent joint venture (JV) to develop next-generation electrical architecture and software technology. As part of the VW deal, Rivian will license its existing intellectual property rights to the JV.

At Rivian’s current cash burn rate of $1.04 billion per quarter, cash would last for just over seven and a half quarters, or nearly two years.

Investors should note, however, that Rivian has the potential to receive up to an additional $4 billion in cash from its joint venture with VW, subject to achieving certain milestones and receiving regulatory approvals. The deal is expected to close in the fourth quarter of this year.

8. Production forecast for 2024 of 57,000 vehicles confirmed

Rivian reiterated its previously published annual forecast:

• Production of a total of 57,000 vehicles. This would correspond to the production level of 57,232 vehicles in 2023.

• Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of minus $2.7 billion. For comparison: In 2023, this figure was minus $3.98 billion.

The company also reiterated that it expects modest gross profit in the fourth quarter.

Rivian is still a risky stock, but the VW partnership lowers the risk level

I will close with a statement from Rivian’s shareholder letter that I agree with:

To be clear, Rivian is still a risky stock because it’s really hard for a car startup, whether it produces electric or gasoline vehicles, to succeed due to the high fixed costs in the automotive industry. But the VW partnership, assuming it closes and goes as planned, makes Rivian stock a little less risky.

And the launch of the R2 platform (mid-range vehicles), planned for the first half of 2026, should further reduce the risk to the stock, as vehicle production volumes will increase significantly and the company’s fixed costs should therefore be better utilized.

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Rivian shares fall, but electric vehicle (EV) maker remains on track to post gross profit in fourth quarter was originally published by The Motley Fool