Can RJ and exec team do a better job with managing RIVN share price?

[Dark-Fx]

The battle of duo rivians?

This kind of all reads like an "I'm upside down on my investment and don't wanna be" complaint to me.

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[SDH]

Its a damned either way situation. If Rivian provides numbers as you suggest and the numbers are too little the street won't like it. If they provide good numbers but don't hit them the street won't like it. At this point worrying about the stock price is way down the list of concerns for the executive team and the best thing they can do is stay the course and hit their goals.

Took the words right out of my mouth! If they give more details/numbers, they are then held hostage to fortune. Gives them little to no wiggle room and frankly there's more downside risk than upside.

Having worked in the City and in Investor Relations, the best thing a company can do is to stop worrying about the share price and just focus on execution. I think on that, Rivian deserves some credit.

 

[tosehee]

I guess RJ can do something like Elon.. by giving some forecasts that he knows that he can't meet?

RJ and his team is meeting every guidelines that they put out and exceeding it. They are reliable, imo, and trustworthy. They are delivering on their promises.

I am tons of stocks on Rivian and losing shit tons right now, but I am not worried at all as I am in a long term, and I know Rivian will not go bankrupt in any time soon if they continue to deliver on their plan.

 

[DuoRivians]

The battle of duo rivians?

This kind of all reads like an "I'm upside down on my investment and don't wanna be" complaint to me.

Here’s the scenario I’m concerned about:

In late 2025, when Rivian has ~$4-5B in cash, RIVN continues to be below $20, Rivian raised all the convertible notes possible while preserving a respectable debt-to-equity ratio, and they need to raise cash.

Wall St smells blood and suppresses the share price to such a degree that Rivian will have very little choice but to dilute existing shareholders significantly.

I agree that Rivian has been executing to what they said they would, since late 2022. It’s been a great accomplishment! But, quarter after quarter, while Rivian beats forecasts, their share price goes nowhere. I thought for sure this Q3 results and Amazon exclusivity ending, RIVN will trade higher. Instead we’re down 16% since earnings.

(Had RIVN been trading gradually higher with each quarter’s accomplishments, I would not have these concerns at all. The pattern of good performance resulting in good share price would be there.)

Yes, there is hope that once they show positive gross profit in H2 2024 that the street will give Rivian some credit and boost the share price meaningfully. But, that feels quite uncertain right now, both in whether Rivian will achieve that and whether the street will respond in kind.

In the meantime, all shareholders, including employees who have been working 3-4 years, aren’t feeling great about the flat share price and the dilution.

If you truly think that the results will take care of itself without exec team’s some focus on the share price, what would those results be? We’re no longer in a zero interest rate environment, and time isn’t on Rivian’s side.

And, do you think the above isn’t a realistic possibility?

 

[Riviot]

Here’s the scenario I’m concerned about:

In late 2025, when Rivian has ~$4-5B in cash, RIVN continues to be below $20, Rivian raised all the convertible notes possible while preserving a respectable debt-to-equity ratio, and they need to raise cash.

Wall St smells blood and suppresses the share price to such a degree that Rivian will have very little choice but to dilute existing shareholders significantly.

Ummm, totally bullish idiot here, but can't they pull a Tesla and sell some bonds when yields drop?

 

[DuoRivians]

Ummm, totally bullish idiot here, but can't they pull a Tesla and sell some bonds when yields drop?

Rivian has been issuing green convertible notes this year. They’ve raised almost $3B in green bonds.

10yr Treasuries will likely hover around 4.5% for the foreseeable future, so I don’t see rates going down much.

Even if they did, there is a cap on how much Rivian could raise without incurring really high interest rates. I don’t know what debt to equity ratio would trigger that. But right now, Rivian’s ratio is about $3B debt/$15B market cap = 20%.

Excess debt, of course, sucks because if you miss an interest payment or the markets think you will, equity prices get crushed in fear of bankruptcy risk.

 

[Riviot]

Rivian has been issuing green convertible notes this year. They’ve raised almost $3B in green bonds.

10yr Treasuries will likely hover around 4.5% for the foreseeable future, so I don’t see rates going down much.

Even if they did, there is a cap on how much Rivian could raise without incurring really high interest rates. I don’t know what debt to equity ratio would trigger that. But right now, Rivian’s ratio is about $3B debt/$15B market cap = 20%.

Excess debt, of course, sucks because if you miss an interest payment or the markets think you will, equity prices get crushed in fear of bankruptcy risk.

So either way, more bonds or issue more stock, raise stock prices first. Got it.

Yeah, why can't RJ & Team do better, huh?!

 

[DuoRivians]

So either way, more bonds or issue more stock, raise stock prices first. Got it.

Yeah, why can't RJ & Team do better, huh?!

I think there are basically two camps:

- just focus on executing and the share price will take care of itself.

- on the margin, work on active investor communications, minimize uncertainties, clear up misunderstandings asap to help the share price where possible. Of course, this works when mgmt sees upside in doing so.

It seems to me Rivian has been pursuing the first approach. But, it doesn’t seem to be working to-date. So, perhaps the second approach is worthwhile?

 

[SANZC02]

I think there are basically two camps:

- just focus on executing and the share price will take care of itself.

- on the margin, work on active investor communications, minimize uncertainties, clear up misunderstandings asap to help the share price where possible. Of course, this works when mgmt sees upside in doing so.

It seems to me Rivian has been pursuing the first approach. But, it doesn’t seem to be working to-date. So, perhaps the second approach is worthwhile?

I think Rivian is going to be ok, they are just starting to walk, compare it to how flat Tesla was for the first 9 years… There were several splits for Tesla so ignore the actual dollar value, the curve is what the image is displaying.

 

[DuoRivians]

I think Rivian is going to be ok, they are just starting to walk, compare it to how flat Tesla was for the first 9 years… There were several splits for Tesla so ignore the actual dollar value, the curve is what the image is displaying.

It was fortuitous for Tesla because they were operating in a near zero interest rate environment during the 2010s. Unfortunately, Rivian doesn’t have that financial conditions backdrop today.

 

[SANZC02]

It was fortuitous for Tesla because they were operating in a near zero interest rate environment during the 2010s. Unfortunately, Rivian doesn’t have that financial conditions backdrop today.

This is true but Tesla was on the brink of bankruptcy through much of that time, they did not have the war chest or deep pockets supporting them that Rivian currently has.

From the Web;
“During the Model 3 ramp-up, they nearly went bankrupt for the third time. Due to inefficiencies in the supply chain, Tesla lost $1 billion in the first half of 2019 trying to increase production. Elon Musk said that Tesla was single-digit weeks away from bankruptcy.”

 

[DuoRivians]

This is true but Tesla was on the brink of bankruptcy through much of that time, they did not have the war chest or deep pockets supporting them that Rivian currently has.

From the Web;
“During the Model 3 ramp-up, they nearly went bankrupt for the third time. Due to inefficiencies in the supply chain, Tesla lost $1 billion in the first half of 2019 trying to increase production. Elon Musk said that Tesla was single-digit weeks away from bankruptcy.”

That’s the thing. I don’t want Rivian to ever be in this situation that Tesla has been in.

RJ/Claire have said they’ll need to raise money. There isn’t a path to self-sustaining profitability with their cash balance today. So while the cash is high today, we know it’ll run out before self sustainability.

So, when they raise more cash, the best ammunition Rivian can have is a healthy equity valuation. This valuation allows them to raise more debt capital (ie higher E allows for higher D), or equity capital with minimal dilution.

All I’m saying is perhaps the team can try approach 2 that I mentioned above to help build this ammunition more (in addition to beating expectations).

 

[Dark-Fx]

Wall St smells blood and suppresses the share price to such a degree that Rivian will have very little choice but to dilute existing shareholders significantly.

Wall Street has made it blindingly obvious they don't want EV companies to succeed. They have been tanking all the share prices so those companies are forced to issue new shares at a much lower price through dilution of the stock if they need access to more capital.

Rivian should do everything they can to avoid doing that, and it pretty much means they have to nail their execution. As an investor in RIVN, they still have a long way to go to do that. I'm confident that the lessons learned in the R1 program should ensure that happens for R2, but we won't see it for years.

 

[BigSkies]

I work in corporate budgeting and forecasting.

With Rivian’s fiscal year, they’re probably still deep in their planning cycle. They probably have a pretty good idea of what 2024 production will look like, but are likely still debating some 2024 projects, Capex, development priorities, etc.

They’ll release guidance when they release guidance. Making it happen sooner won’t make a difference for the stock when viewed over a multi-month time period. It will make the stock go up or down on a single day. That’s it.

IMO, the stock doesn’t have much room to go up until the following things happen. Wall St needs to understand:

1. What it the path to cash-flow positive? How many cars do they need to be selling to start generating cash, and what is the timeline to get there?
2. How much additional capital will they need? When will they raise it, and what will it look like?

I don’t think we’ll get good answers to these questions until 2025 or 2026.

 

[Rickmc]

I am long RIVN and feeling the pain as well from the market manipulation (10% stock hit on beating all estimates in every category), so I buy more and if you have some money, then buy yourself some insurance in the form of PUT options. You can trade those PUTS just like the shares and you can make money as the stock gets irrationally beat up while you wait for the stock to come back.

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