Rivian (RIVN) Stock Drops on Strategy Shift and CEO Stock Sale

TLDR

• Rivian stock dropped after announcing a Tesla-style direct sales strategy with one unexplained deviation
• CEO RJ Scaringe sold $305,000 worth of company shares around the same time as the strategic announcement
• The company already sells vehicles directly to consumers without traditional dealerships
• Rivian has a major contract to build 100,000 electric delivery vans for Amazon
• The EV maker reported progress on reducing losses per vehicle in its latest quarterly results

Rivian stock took a hit this week following a double dose of news. The company announced a new business strategy borrowing from Tesla’s playbook while CEO RJ Scaringe unloaded shares worth $305,000.

Rivian Automotive, Inc., RIVN

The EV maker revealed plans to embrace a Tesla-style operational model. But one key exception to the approach spooked investors enough to send shares lower.

Rivian already operates without traditional car dealerships. The company sells its R1T pickup trucks and R1S SUVs directly to buyers through its website and company-owned facilities.

This matches how Tesla has operated for years. The direct sales model lets EV makers control pricing and customer interactions while cutting out the middleman.

But Rivian’s version includes a twist. The nature of this deviation wasn’t spelled out in public reports. That mystery may have fueled investor worries about the plan.

Stock Sale Timing Raises Questions

Scaringe’s stock sale showed up in SEC regulatory filings. The $305,000 transaction happened right around when the strategic shift was announced.

Executive stock sales happen regularly and often follow predetermined plans. Scaringe still owns a large stake in the company he founded back in 2009.

The CEO has steered Rivian from a startup through its massive IPO in late 2021. The company debuted at $78 per share with a valuation topping $100 billion.

Those heady days are long gone. The stock has struggled along with other EV names as interest rates climbed and competition heated up.

Production Ramps Up in Illinois

Rivian has been cranking up output at its Normal, Illinois plant. The factory delivered thousands of vehicles in recent quarters as the company worked through its order backlog.

The Amazon deal remains a cornerstone of Rivian’s business plan. The e-commerce giant invested heavily in the EV maker and ordered 100,000 electric delivery vans.

Those vans are already hitting the streets in various markets. Amazon views the electric fleet as key to meeting its climate commitments.

Competition keeps intensifying in the electric pickup space. Ford launched its F-150 Lightning while GM rolled out the electric Silverado, both targeting Rivian’s core market.

Financial Progress Continues

Rivian’s latest quarterly report showed improvement on vehicle economics. The company reduced how much money it loses on each vehicle sold.

Management has set targets for achieving positive gross margins as production volumes grow. Higher output should spread fixed costs across more units.

The company operates its own service network and delivery system. This vertical integration mirrors Tesla’s approach to controlling the customer experience.

Rivian shares trade on the Nasdaq under ticker RIVN. Scaringe’s recent stock sale was executed at market prices during the transaction window.

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