Shares of Rivian Automotive (NASDAQ:RIVN) fell by 12% on Friday, closing the week at just over $10. Electric vehicle (EV) stocks have been struggling this year but Rivian has been performing particularly poorly, falling by 57% since the start of 2024.
Investors have been growing concerned about rising competition in the EV market from Chinese companies, and challenging macroeconomic conditions only exacerbate those issues. It also doesn’t help matters that Rivian is an incredibly unprofitable company.
The company recently posted its quarter results last week and for the fourth quarter, Rivian reported a net loss of $1.5 billion, which was only a slight improvement from the $1.7 billion loss it incurred in the prior-year period. While the company’s business is growing, it’s hard for investors to ignore such steep losses.
The hype surrounding EV stocks is fading and investors are clearly looking for more than just the potential for long-term growth. Rivian’s troubling bottom line doesn’t put it in a good position. And there’s little reason, unfortunately, to expect that things will get any better for the stock. While Rivian’s stock hit a fresh 52-week low last week, with a valuation of $9.4 billion, this is still a highly valued business despite some incredible risks that come with it.
Investors would be well advised to steer clear of Rivian’s stock as this could be dangerous investment to be hanging on to this year, especially if economic conditions deteriorate and demand for EV vehicles proves to be even more underwhelming than feared.
