This week we are looking at Rivian Automotive Inc, [NasdaqGS:RIVN] which put out some positive results last month. Rivian stock is well off its six month highs. At time of writing this piece, on Friday afternoon, when I ran the stock through our AI analytics, it was trading at $14.05, off by 48% on the six month time frame.
Investors who have held Rivian for a year will have lost over 50%. The BridgeWise AI engine currently rates the stock an Underperform. What’s going wrong?
Reuters was very bullish about Rivian in the wake of its results, as the company reported that it was set to add around $700m to its market valuation (Rivian beat quarterly revenue estimates). The move to raise prices last year has helped Rivian to stem its cash burn rate. The long streak of losses does mean that it is bound to be marked down by the AI engine, which looks for profitable companies.
Mixed technical signals on Rivian stock
Starting with the fundamental highlights, we can Rivian has been marked down on its book value and total common equity metrics. The technical analysis for the stock is a mixed bag, although the MACD and RSI both look good at the moment. The overall marker for its technical position is 57/100, which means we are not looking at any momentum indicators to get excited about.
One of the great things about the BridgeWise data is the way you can compare and contrast companies with their closest peers. I’ve not seen it done with this level of granularity anywhere else. In this case, I can clearly see how Rivian measures up against close peers like Tesla NASDAQ:TSLA and General Motors NYSE:GM. I also get a great global snapshot which can show me other companies that I might be missing out on (Li in China looks in much better shape).
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Rivian is underperforming the automotive sector average across all its fundamental metrics. It marginally beats Tesla on the income metric, and General Motors on cash flow, but it is small.
Rivian’s equity metrics look unremarkable, and its equity movement component is 42/100. With the BridgeWise data, anything under a 50/100 is an issue for worry. Book value metrics look even more worrying when compared to peers. Disappointing results in book value factors typically precede negative pressure in stock prices.
Rivian is not currently keeping up with its sector peers
There is also disappointing income growth, especially in terms of revenue efficiency and return factors. The AI rightly pin-points some of the cash burn issues analysts have flagged up across the specialist EV sector. Revenue efficiency in particular looks concerning and our system reckons that will continue to have a depressive effect on the share price. The AI gives the company a staggering 38/100 score for this, which is very poor indeed.
“These numbers show that management has been unsuccessful in fostering appropriate growth related to return on assets and return on equity momentum relative to peers,” BridgeWise said in its commentary on Rivian stock.
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Where Rivian continues to do well is on capex. Free cash flow looks respectable, although asset turnover is underwhelming. Bear in mind that the scores are being calibrated off how Rivian is doing against its peers in the automotive sector, not just against the market as a whole.
We can see this is a sector that continues to struggle against some other sectors at the moment, with few real stars. It obviously generates a lot of enthusiasm with investors, but it may be for those who want to own Rivian for years in order to see some real return.
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