RJ's confidence the past few days

[rivinv]

Long time Rivian investor here. RJ in his recent earnings call and the CNBC interview the next morning, really spooked me.

1) Trust is important for investors; and listening to RJ's interviews and podcasts - I always felt he was a straight talking honest guy.
When stock took a dive beginning of 2024 due to 2023-Q4 deliveries, he gave an interview with Cramer, and explained it was due to Amazon not taking deliveries and that he was very confident of R1 orders. He spoke with so much confidence and fast forward to a month later, he starts the earnings call saying that Rivian is having R1 order issues. The confidence he showed in Cramer's interview just a month back, shows no where in his earnings call tone. What has changed in just a month's time? Or was he lying in Cramer's interview?

2) Like you, me and other Rivian-believers/optimists feel - the earnings report is not bad considering that 57K production goal and gross profit positive by end of 2024. BUT, had RJ been confident in the earnings call saying that "Look, we want to be gross margin positive by end of 2024, so we target 57K production only due to planned factory shutdowns to achieve this goal", things would have been different. But his tone appeared so low on confidence and kind of scared.

Now, this does not sound right. I find it hard to comprehend what could have gone wrong in a month's time that RJ suddenly appears to be so low in confidence.
It appears that something is brewing that really shook him. And that spooks me and i guess other investors too.

If any of Rivian bulls/optimists can address my above concerns, that would definitely give me some relief!

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[DuoRivians]

I wouldn’t read too much into RJ’s appearance. $rivn is so fickle. When the ATT EDV news broke in Dec (just two months ago!), $rivn traded in the $24 range.

Now, it’s at an all time low.

I do wish Rivian’s team would consider how news would affect the share price, and possibly provide more information and be more transparent along the way. I think this would help remove a lot of the volatility in the share price.

With all that said, the current share price isn’t helping investors or the company’s ability to raise cash. Ugh…

 

[Twitter Fingers]

This company is his life's work and mission. Thousands of families are relying on him to keep it going. The stock is down 35% in two days and the laughing stock of the financial world. He's probably unsure of what this means for his ability to raise capital going forward. He's nervous and shook. RJ is a human being.

What happened over the last quarter? They transitioned from selling vehicles to eager early adopters who couldn't wait to get their hands on the vehicle, to a new set of buyers who are mostly fence sitters and the unaware general public. This shift happened quickly. Early on they couldn't get the vehicles out the door quickly enough, now inventory is suddenly starting to build. The company is adapting by pulling forward the timelines on demand levers such as leasing and standard battery pack. They're expanding the marketing team to move the vehicles. Nobody knows exactly where the demand will settle in, so they guided low to be on the safe side.

The margins NEED to improve, significantly. The one thing I would like from RJ is to see him more cutthroat. Delete things like camp speaker. Get cost as low as possible. The vehicles are cool enough to sell without the gimmicks. They have to show the world that they can sell a vehicle for more than it costs to make. The whole thing rides on this.

 

[DuoRivians]

This company is his life's work and mission. Thousands of families are relying on him to keep it going. The stock is down 35% in two days and the laughing stock of the financial world. He's probably unsure of what this means for his ability to raise capital going forward. He's nervous and shook. RJ is a human being.

What happened over the last quarter? They transitioned from selling vehicles to eager early adopters who couldn't wait to get their hands on the vehicle, to a new set of buyers who are mostly fence sitters and the unaware general public. This shift happened quickly. Early on they couldn't get the vehicles out the door quickly enough, now inventory is suddenly starting to build. The company is adapting by pulling forward the timelines on demand levers such as leasing and standard battery pack. They're expanding the marketing team to move the vehicles. Nobody knows exactly where the demand will settle in, so they guided low to be on the safe side.

The margins NEED to improve, significantly. The one thing I would like from RJ is to see him more cutthroat. Delete things like camp speaker. Get cost as low as possible. The vehicles are cool enough to sell without the gimmicks. They have to show the world that they can sell a vehicle for more than it costs to make. The whole thing rides on this.

I think this is a fair assessment of the situation. I wonder, however, if Rivian guided 67K cars in 2024, if the market would have reacted anywhere close as harshly.

66K was the whisper number by many analysts.

 

[TexasBob]

I think he was genuinely surprised by the reversal on GM from an improving to declining trajectory. Second, sales took a bad pause and inventory is climbing. I also think the GA plant is not moving at the planned pace or cost. It has converged to yield a bigger and faster cash burn than anticipated even just 3 months ago. So now he has to do something very difficult - fire people who did nothing wrong but work hard and believe in him. All of these are first time events for him. They suck.

 

[Twitter Fingers]

I think this is a fair assessment of the situation. I wonder, however, if Rivian guided 67K cars in 2024, if the market would have reacted anywhere close as harshly.

66K was the whisper number by many analysts.

No, I don't think it would have.

The story here is margins (in my opinion).

The company needs to get to positive margins. 35%(ish) of the remaining path to positive margins was fixed cost absorption from volume. That's off the table now for this year. So, if the Peregrine program isn't enough to get positive margins by itself, and demand is such that volume expansion is not feasible, then we're stuck in a very bad place where we're selling vehicles for losses for years to come. That won't work.

RJ needs to figure out how to get positive margins this year as promised, otherwise who would trust him with their (newly needed) capital to go produce R2?

 

[Twitter Fingers]

I think he was genuinely surprised by the reversal on GM from an improving to declining trajectory. Second, sales took a bad pause and inventory is climbing. I also think the GA plant is not moving at the planned pace or cost. It has converged to yield a bigger and faster cash burn than anticipated even just 3 months ago. So now he has to do something very difficult - fire people who did nothing wrong but work hard and believe in him. All of these are first time events for him. They suck.

RJ and the company were not surprised by the worse GM this quarter. They guided for it on the Q3 earnings call. It was due to less EDV deliveries in the quarter. Their margins are roughly on track with expectations. Claire mentioned that R1 was "almost" contribution margin positive exiting Q4, which was their target.

 

[rivinv]

I think he was genuinely surprised by the reversal on GM from an improving to declining trajectory. Second, sales took a bad pause and inventory is climbing. I also think the GA plant is not moving at the planned pace or cost. It has converged to yield a bigger and faster cash burn than anticipated even just 3 months ago. So now he has to do something very difficult - fire people who did nothing wrong but work hard and believe in him. All of these are first time events for him. They suck.

Thank you for your reply and all others who replied too.

They definitely help give me a picture of what he could be looking at and how he could be feeling being in such difficult spot.

Also probably he was expecting the levers of leasing, new battery pack trims shore up much more demand, and probably seeing those not meeting expectation; and these are the numbers he got very recently too in the last one or two months.

My only glimmer of hope the past few days comes from the most unexpected quarters - Mr.Musk

I have seen his tweets:

"Current trajectory has them bankrupt in ~6 quarters. Maybe that trajectory will change, but so far it hasn’t."
--> So Musk thinks the trajectory could change, which is definitely a positive coming from him. So it is up to RJ and his team to change the trajectory now.

“Their product design is not bad, but the actual hard part of making a car company work is achieving volume production with positive cash flow.”
--> Another compliment regarding the Rivian product design, which I truly believe in. Actually that is a great compliment I would say for Rivian product design.

"They need to cut costs massively and the exec team needs to live in the factory or they will die"
--> A great advice from the man who did it. Now it is up to RJ and his team to get on to work; it is extreme hard work; but there is a precedent.

So I really wish RJ gets himself together and becomes the second person to do it!

 

[SANZC02]

Bankruptcy is one of Musks favorite words, he claims his companies many times were days or weeks away from it.

Not sure how much I would trust someone’s opinion who has no knowledge of the inner workings of Rivian and spent 44 billion on a company in Oct 2022 then drove it into the ground in a mere 14 months with an estimated worth today of 12.5 billion. Every move he mad with that company has been a disaster.

 

[VSG]

I'll tell you something right now. I know RJ, and that wasn't RJ.
It's like something was wearing RJ. Like a ... like a suit. An RJ suit.

 

[Rainman]

The issue for the market and those of us who are investors is, what’s the path forward? you just told us volume isnt increasing so where is revenue and profit coming from? I don’t care about gross margin, as they will still be burning cash at an alarming rate. What is the plan for the company? Burn cash until 2026 and hope that the R2 does well?? This is a concerning situation as an R1 owner and shareholder.

 

[olsonnet]

These brand new accounts joining just to post threads like this one are a little sus...

 

[COdogman]

The stock market and those obsessed with it are like a bunch of frightened squirrels running in all directions for no real reason at all.

The situation Rivian is in has not changed enough in the past week to even somewhat justify the overreaction we are seeing after 1 earnings call and an interview.

 

[Dark-Fx]

He seems really confident in R2 and that's where his focus should be right now. Getting past the R2 reveal.

Analysts are all trying to get RJ to spill forward looking statements that don't mean much in the grand scheme of things. I'm with @COdogman that not much has really changed in the last week.

 

[Rivianready]

I think we need to recognize that ALL car companies are feeling the headwinds of higher interest rates and inflation. Rivian is no exception. But, inflation is dropping and so will rates. When they do, people will start to buy. Combine that with the R2 release and I believe that sales and volume will increase. It will take a while but Rivian will get back on track.

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