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Rivian (RIVN) Plans Another Round of Layoffs to Rein in Costs
Rivian (RIVN - Free Report) is laying off 6% of its workforce in a bid to control costs as the electric vehicle (EV) startup is reeling under a cash crunch. This is the second time that the company will be trimming its headcount in less than a year. It should be noted that Rivian had laid off 6%, nearly 14,000, of its workforce in July 2022 to cope with inflationary pressure, rising interest rates, and high commodity prices.
This latest round of layoffs will be aimed at cutting operational costs as the company remains focused on boosting and generating profits. The job cut comes in the wake of the recent wave of price wars instigated by EV manufacturing giants like Tesla (TSLA - Free Report) and Ford (F - Free Report) .
The higher profit margins in the sector gave Tesla, the EV pioneer, the liberty to sell its vehicles at discounted rates or with credits. Ford followed Tesla’s lead, forcing other manufacturers to lower their offering prices or witness their market share fade.
According to the memo, Rivian was forced to slash jobs to fulfill its long-term growth strategy of lowering costs, improving operational efficiency, focusing resources on ramping up R1 and EDV production and launching its high-volume R2 platform. Importantly, there won’t be any job cuts at its production facility in Illinois.
Just like many other EV startups, Rivian is grappling with production ramp-up and declining cash reserves. Rivian’s shares have been tumbling after hitting a high on November 2021. Over the past year, the stock plunged around 65.7%, wider than the industry’s loss of 42.9%.
Image Source: Zacks Investment Research
Rivian marginally missed the target of producing 25,000 vehicles in 2022, falling short by 633 vehicles. Nonetheless, production and deliveries in the fourth quarter of 2022 improved sequentially. The company produced 10,020 and 8,054 vehicles, respectively, in the fourth quarter of 2022.
The market valuation of Rivian is somewhere around $18 billion. As of Sept 30, 2022, the cash and cash equivalents amounted to $13.27 billion, down from over $18 billion a year earlier.
Zacks Rank & Key Pick
Rivian currently carries a Zacks Rank #3 (Hold). A better-ranked player in the same industry is Harley-Davidson (HOG - Free Report) , which carries a Zacks Rank #2 (Buy).
Harley-Davidson is one of the leading motorcycle makers globally and the parent entity of company groups doing business as Harley-Davidson Motor Company and Harley-Davidson Financial Services. The Zacks Consensus Estimates for HOG’s 2023 sales and earnings imply year-over-year growth of 2.49% and 1.03%, respectively.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.