MW Rivian keeps promise on making a profit, but here's why the stock is falling

By Claudia Assis

EV maker achieves a 'sizeable' beat on gross profit, but stock falls as outlook disappoints

Rivian Automotive Inc. made good on its promise to get to its first quarterly gross profit and blew past Wall Street estimates for its sales, but the EV maker's stock reversed initial gains to head for a third-straight loss.

Rivian stock $(RIVN)$ knee-jerked as much as 8.4% higher in the first minute after results were reported after Thursday's close, but quickly backed off, as investors digested some worrying aspects of Rivian's fourth-quarter print, including a weaker guidance for this year.

The stock dropped 4% in morning trading Friday, and has now lost 9.5% amid a three-day losing streak.

"In our view, this was a mixed release," CFRA analyst Nelson Garrett said. Revenue rose 32% to $1.7 billion, some $300 million above consensus. But the 2025 outlook was a disappointment, he said.

Rivian guided for an adjusted loss before interest and taxes of between $1.7 billion and $1.9 billion, below consensus of a loss around $1.69 billion. Moreover, its sales guidance of between 46,000 and 51,000 EVs implies a decline from the 51,579 vehicles delivered in 2024.

Rivian's guidance "implies that its cash burn will continue throughout 2025," the analyst said. There's also some risk that the $6.6 billion loan it got from the Energy Department during the Biden administration could be rolled back, he said.

In the good-news column, Rivian got to gross profit of $170 million in the fourth quarter, with $110 million coming from its automotive business and $60 million from the software and services segment, it said. Gross profit is total revenue minus the cost of revenue, and Rivian's cost of revenue dropped 18.6% while revenue rose 31.9%.

Rivian's gross profit was a "sizeable" beat, far above Wall Street expectations of gross profit of about $49 million, RBC Capital Markets analyst Tom Narayan said.

Narayan said that Rivian appears to have enough cash to fund operations through the launch of its next-generation EVs in 2026, but ultimately "a lot rests on the company's ability to improve its underlying gross profit performance, excluding regulatory credits."

Rivian also narrowed its fourth-quarter net loss to $743 million, or 70 cents a share, as compared with a loss of $1.52 billion, or $1.58 a share, in the same period in 2023. Net losses include other operating expenses that cost of revenue doesn't, such as the cost of research and development and general administrative expenses.

Adjusted for one-time items, Rivian lost 46 cents a share in the quarter, narrower than FactSet consensus of a loss of 68 cents a share.

The $1.73 billion quarterly revenue was mostly thanks to the sale of regulatory credits, software and services revenue growth, and a higher average selling price for its first-generation EVs, the company said. That compares with FactSet consensus for revenue of $1.4 billion.

Rivian also touted "greater operational efficiencies in its Normal, Ill., plant. "We expect these improvements to benefit Rivian over the long term and position us to achieve modest gross profit for 2025," the company said.

The EV maker said it expects to reach a "modest" gross profit for all of 2025.

In the call with analysts, Rivian executives tried to inject some optimism regarding the government loan, saying that they were "looking forward to working with the new administration" and the Department of Energy on the loan, which would enable about 7,500 new manufacturing jobs.

-Claudia Assis

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February 21, 2025 10:07 ET (15:07 GMT)

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