Rivian Automotive, Inc. (RIVN) designs, develops, manufactures, and sells electric vehicles and accessories. It provides a Rivian Commercial Vehicle platform for electric Delivery Van in collaboration with Amazon.com, Inc. (AMZN).

On July 28, 2022, RIVN declared its plans to lay off about 6% of its workforce. CEO RJ Scaringe states, “We are financially well positioned, and our mission is more important than ever, but to fully realize our potential, our strategy must support our sustainable growth as we ramp towards profitability.”

However, RIVN has lost 66.8% year-to-date to close the last trading session at $34.45. Moreover, it has lost 48.1% over the past six months.

Here is what could shape RIVN’s performance in the near term:

Bleak Financials

For the second quarter ended June 30, 2022, RIVN’s total operating expenses came in at $1 billion, up 73.1% year-over-year. Its loss from operations came in at $1.71 billion, up 194.5% year-over-year.

Moreover, its net loss increased 195.2% year-over-year to $1.71 billion. Its adjusted EBITDA came in at a negative $1.30 billion, compared to a negative $559 million in the year-ago period. Also, its net cash used in operating activities came in at $1.20 billion, up 146.2% year-over-year.

Stretched Valuations

In terms of its forward EV/S, RIVN’s 10.00x is 738.2% higher than the industry average of 1.19x. Its forward P/S of 17.25x is also significantly higher than the industry average of 0.96x.

Poor Profitability

RIVN’s trailing-12-month ROCE, ROTC, and ROTA of negative 96.58%, 33.62%, and 34.70%, compare with the industry averages of 15.82%, 7.09%, and 5.23%, respectively.

POWR Ratings Reflect Bleak Prospects

RIVN has an overall rating of F, equating to Strong Sell in our proprietary POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

RIVN has an F grade for Value and Quality, in sync with its higher-than-industry valuation multiples and lower-than-industry profitability ratios, respectively.

In the 66-stock Auto & Vehicle Manufacturers industry, RIVN is ranked #62. The industry is rated D.

Click here for the additional POWR Ratings for RIVN (Growth, Momentum, Stability, and Sentiment).

View all the top stocks in the Auto & Vehicle Manufacturers industry here.

Bottom Line

RIVN is fast advancing in the EV space. The company launched three fast-charging sites in Colorado and California in June, the first in its nationwide RIVN Adventure Network. However, its fundamentals seem incapacitated. Therefore, I think the overvalued stock RIVN might be best avoided now.

How Does Rivian Automotive, Inc. (RIVN) Stack Up Against its Peers?

While RIVN has an overall POWR Rating of F, one might consider looking at its industry peers, Stellantis N.V. (STLA), Hyundai Motor Company (HYMTF), and Suzuki Motor Corporation (SZKMY), which have an overall A (Strong Buy) rating, and Volkswagen AG (VWAGY), which has an overall B (Buy) rating.

RIVN shares were trading at $33.56 per share on Monday afternoon, down $0.89 (-2.58%). Year-to-date, RIVN has declined -67.63%, versus a -11.91% rise in the benchmark S&P 500 index during the same period.

Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.

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