CONCERN: RIVN have enough cash to to go beyond 2025 and launch R2?

[Zorg]

I don't see how they survive til R2 ramp, sometime in 2026, without new cash. So, something will have to give. Demand for expensive EVs is limited, and they have limited cash. Their opex is at nearly $4b annual run rate. Even with a 10% layoff, they're still looking at spending $3.5b+ this year, while trying to solve the gross margin issue and building a $5b factory. Numbers don't add up. This all points to a massive cash infusion while drastically reducing expenses.

Apple buying Rivian would solve it all.

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[NineElectrics]

The CEO of a publicly traded company should avoid answering questions they don't have an answer to. Even saying he can't answer that is an answer. I am not concerned about the deflection.

He should have an answer already. He already cost Rivian a ton of money by selling bonds too late, once interest rates spiked. The company should have already made plans, because hope is not a strategy. Not answering signals to investors that they are in denial or can't plan ahead.

 

[Gr8Barn]

He should have an answer already. He already cost Rivian a ton of money by selling bonds too late, once interest rates spiked. The company should have already made plans, because hope is not a strategy. Not answering signals to investors that they are in denial or can't plan ahead.

100% correct. Too many people are justifying RJ’s weak response as a legitimate excuse and pause. He is the CEO and should be well versed on what the financial picture will look like in the next quarter, year and beyond. His none answer and deflection might have worked back in the dot-com bubble, but today, people want answers and execution.

 

[NineElectrics]

I would say the larger question is can any specialty car manufacturer survive on relatively low volume?

This is where I disagree with Rivian's current strategy. They bought the Normal factory for cheap. They could have thriftily used that for all manufacturing and stayed capital efficient. In a downturn, they would be relatively unscathed.

Instead, they tried to get "too big to fail" by spending massively to aggressively expand. Essentially, trying to spend their way into becoming a large automaker, despite having no competitive advantage over incumbent manufacturers, who have long since paid off their factories and have a lot of expertise and volume. This worked for Tesla, but Tesla had the help of the Chinese government, and there was less competition and cheaper capital.

That strategy might have worked in a low interest rate environment, but now they need expensive capital and they're exposed if demand drops. They rolled two dice (cheap capital and high demand) and both of those rolls came up short.

 

[NineElectrics]

They will definitely need to raise cash, and the sooner the better. I wouldn't be surprised if they did it right after the R2 reveal, using the buzz to get more cash. They need to spend another $3-4B for the new plant and their cash burn is out of hand. 10% RIF may be a little light frankly.

Agreed. Now the stock reflects the near-certainty that they will do this. It's just a matter of how much dilution has been priced in. So the stock could well pop after the reveal if Rivian dilutes less than the market expects.

 

[DuoRivians]

He should have an answer already. He already cost Rivian a ton of money by selling bonds too late, once interest rates spiked. The company should have already made plans, because hope is not a strategy. Not answering signals to investors that they are in denial or can't plan ahead.

The interest rate on the convertible debt wasn’t too high. In fact, Rivian reported positive and growing net interest income on their income statement. This would happen as reverse repo rates through the Fed approached 5% while the conv debt interest stayed low (I believe in the 3% range). So effectively, Rivian borrowed low and reinvested that money at a higher rate.

 

[kurtlikevonnegut]

This is where I disagree with Rivian's current strategy. They bought the Normal factory for cheap. They could have thriftily used that for all manufacturing and stayed capital efficient. In a downturn, they would be relatively unscathed.

Instead, they tried to get "too big to fail" by spending massively to aggressively expand. Essentially, trying to spend their way into becoming a large automaker, despite having no competitive advantage over incumbent manufacturers, who have long since paid off their factories and have a lot of expertise and volume. This worked for Tesla, but Tesla had the help of the Chinese government, and there was less competition and cheaper capital.

That strategy might have worked in a low interest rate environment, but now they need expensive capital and they're exposed if demand drops. They rolled two dice (cheap capital and high demand) and both of those rolls came up short.

I don't think the error was in building a new facility, I think the error was location. The initial frontrunner location in Fort Worth looks like it would have been a much better decision in retrospect. A real shame that a bunch of NIMBY hayseeds have managed to put Rivian and all of their employees into serious jeopardy by successfully delaying them for a year.

 

[WorldComposting]

For those worried about the future of Rivian and maintenance of their vehicles I really won't worry. Even if Rivian runs out of money they will be bought out by some entity. I can't imagine the value they have produced will just run to nothing when they sold over 100,000 vehicles and have a working factory.

Also when they start to charge a membership fee it will1 introduce reoccurring revenue. While small this can add up the more vehicles they have on the road. At 100,000 vehicles sold say 50% pay @ $100 each year that would be 5 million per year. Yes small but would grow with sales.

As far as who could want to buy out Rivian if they really drop I don't see Tesla touching them but I do see some legacy manufacturers who might really want to get a hold of the technology such as Stellantis (Jeep) or Toyota/Subaru. Granted there could always be some foreign interest as well.

 

[ndmiller]

I think every speculating in these types of threads need to disclose their stake in RIVN and whether they are shorting the stock.

Every week multiple will they survive threads are started in some way shape or form by multiple people with the same open ended questions adding recent news of the day. I've ignored that forum as it's complete nonsense clickbait rehash to try and change the stock value through google analytics.

MODS this thread isn't about Ordering, Pricing, Leasing, Production, Delivery, Tax Credits can you move it to RIVN investing forum Please

 

[zonehawk]

Also when they start to charge a membership fee it will1 introduce reoccurring revenue. While small this can add up the more vehicles they have on the road. At 100,000 vehicles sold say 50% pay @ $100 each year that would be 5 million per year. Yes small but would grow with sales.

That $5 million is nothing... It's about half a day of their loses expected this year, one tenth of one percent.... essentially a rounding error. Unless they get bought out by some auto company that's already established the service centers will stop, the factory will stop producing parts for repair and warranty and some functionality of the vehicle, its connectivity, and the app will shut down eventually. Tesla was about 1 month away from bankruptcy in 2017/2018 and they had a far better market and rates for success.

I want Rivian to succeed but things have to change significantly in the next 12-18 months for them to survive.

 

[BigSkies]

The math isn’t that hard. Cash on hand minus expected 2024 losses minus Capex gets them through 2024 but not 2025.

If they can’t raise capital in 2025, the company goes up for sale. The brand survives under another owner. I suspect this is the most likely outcome.

 

[ThatOneGuy]

I think every speculating in these types of threads need to disclose their stake in RIVN and whether they are shorting the stock.

Every week multiple will they survive threads are started in some way shape or form by multiple people with the same open ended questions adding recent news of the day. I've ignored that forum as it's complete nonsense clickbait rehash to try and change the stock value through google analytics.

MODS this thread isn't about Ordering, Pricing, Leasing, Production, Delivery, Tax Credits can you move it to RIVN investing forum Please

Completely agree. There's a clear concerted effort to push the message that Rivian is failing.

 

[R1TS]

Rasie more capital.

Ready for $RIVN to drop under $10?

 

[emoore]

Ready for $RIVN to drop under $10?

If that's what they need to do to survive, sure.

 

[DuoRivians]

If that's what they need to do to survive, sure.

If Rivian raised $5B tomorrow, I would buy back my shares.

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