- Loss-making electric vans maker to axe some programmes
- Massive retail stock Amazon Rivian’s second biggest backer
- Net losses of $1.59 billion reported in Q1 as growth missed
Electric vehicles maker Rivian Automotive (RIVN:NASDAQ) has told investors that it will need to slash costs as it realigns operations with falling economic growth crippled by soaring inflation.
In a letter to shareholders, founder and chief executive Robert Scaringe said that the electric vehicle start-up was working to focus the business to stay ahead of the changing economic landscape.
Rivian is believed to be mulling moves to prioritise some programmes, axe others, halt non-manufacturing hiring and adopt major spending cuts to reduce running expenses. No further details were given as to which programmes could face the axe.
AMAZON BACKING
Many investors may wonder why they should care, and the reason is Amazon’s (AMZN:NASDAQ) large backing of the business. The ecommerce giant is Rivian’s second largest backer with a 158 million share stake (17.7% approx). Amazon is using Rivian’s vehicles to help it meet its goal of net-zero carbon emissions by 2040, ordering 100,000 delivery vans.
Amazon saw its investment in the company pay off at the end of 2021, when it reported a near $12 billion gain from Rivian’s initial public offering. But it has felt the fall this year, reporting a $7.6 billion loss from the investment in the first three months of 2022.
Amazon shares are among the most popular in the world with retail investors, with millions owning direct stakes and millions more exposed through global growth and US market tracker funds and ETFs. 2022 has been tough on Amazon’s stock, losing 36% so far this year.
RIVIAN MARKET CAP SLASHED
Rivian IPO’d in August 2021 amid investor excitement, and its offer price of $78 a share was set far above the company’s $58 to $62 target. But it continues to run up huge net losses, $4.7 billion in 2021 on $55 million revenue, turning the investment sour. The share price has slumped to $30.15, slashing Rivian’s market value from around $117 billion to $27 billion.
In Q1, revenues jumped to $95 million, missing forecasts of $133 million, while net losses were $1.59 billion. Rivian will report Q2 results on 11 August, when it is expected to show revenues of around $320 million.
