When Rivian (RIVN) posted poor unit deliveries and slashed its 2022 output forecast, the stock plunged. The share price decline is bad news for Ford (F) and Amazon (AMZN). Both firms enthusiastically booked paper gains in the fourth quarter. Now that the stock is nowhere near the $103 price by the end of last year, Rivian may pressure F and AMZN stock.
Rivian posted a GAAP EPS loss of $4.83 a share. It reported revenue of just $54 million. Investors cannot justify the risks of buying this overvalued stock at this time. The stock trades at an infinitely large price-to-sales ratio. Its rising costs should worry shareholders. In Q4, expenses topped $2.45 billion. Research and development costs almost tripled to $726 million. Sales and related costs soared from $98 million last year to $682 million.
Rivian’s high costs will deplete its $18.4 billion in cash. The company has time to lower its costs. It will honor pre-orders and sell units at a loss. It already raised prices for pre-orders made after March 1. Still, the supply shortage is increasing input costs.
RIVN stock needs to stop falling. Bears may close the 4.74% short float position against the company. That should ease the related selling pressure on both Ford and Amazon stock.