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Rivian Screwed Up. Here is How It Can Do Higher.

Share this…FacebookPinterestTwitterLinkedin As I write this, it is solely Tuesday morning — however electric-vehicle start-up Rivian Automotive (NASDAQ:RIVN) is already having…

By Staff , in Investments , at January 11, 2022

As I write this, it is solely Tuesday morning — however electric-vehicle start-up Rivian Automotive (NASDAQ:RIVN) is already having a tricky week.

Rivian traders wakened Tuesday to 2 sad (and possibly associated) bits of reports. 

First, do you know that the corporate’s chief working officer, Rod Copes, left in December?

We all know that now, however solely as a result of a Wall Road Journal reporter seen yesterday that Copes had up to date his LinkedIn profile to say that he had retired.

When requested, Rivian confirmed Copes’ departure. The corporate instructed the Journal that Copes’ retirement had been deliberate for months, and that his tasks had been absorbed by others on the corporate’s senior management crew.

On the floor, that is effective. However why are electric-vehicle traders solely studying this now? 

There isn’t any good reply to that query, which is why Rivian’s shares fell sharply in after-hours buying and selling on Monday after the Journal’s report was revealed. 

In any case, a chief working officer with many years of experience within the vehicle-manufacturing enterprise may be anticipated to play a key position within the ramp-up of manufacturing, which is what Rivian is engaged on proper now.  

At the very least Rivian warned us about the second

Talking of Rivian’s manufacturing ramp, there is a second unwelcome piece of reports, and it is doable that it is associated to Copes’ departure. 

At the very least this one isn’t surprising, precisely. 

Shareholders will recall that Rivian instructed traders final fall that it anticipated to fabricate about 1,200 automobiles in 2021. In December, it warned that it’d fall wanting that quantity due to provide chain points. (Shareholders will recall that, too, as a result of the inventory fell over 10% on the information.) 

Late yesterday, we came upon that it did in truth fall quick. Rivian stated in a regulatory submitting that it manufactured 1,015 automobiles in 2021, and that it delivered 920 of them earlier than the tip of the 12 months. 

Partially-completed Rivian R1S electric SUVs on the assembly line at the company's factory in Normal, Illinois.

Rivian confirmed that its 2021 manufacturing fell wanting its unique steering. Picture supply: Rivian.

Copes joined Rivian in 2020 from the Royal Enfield bike firm, the place he had been president of its North American enterprise unit. Copes had beforehand held a sequence of management roles, together with manufacturing roles, in 19 years at Harley-Davidson. It appears fairly cheap to imagine that he knew a factor or two about manufacturing ramps.

Is the manufacturing shortfall by some means associated to Copes’ departure? We do not know.

Rivian must do higher at holding traders knowledgeable

I’ve stated earlier than that within the grand scheme of issues Rivian’s 2021 manufacturing shortfall isn’t any huge deal. The corporate is clearly roughly on monitor with its manufacturing ramp, early clients are reportedly very pleased with their automobiles, and critiques of the R1T electrical pickup have been fairly constructive.

However you would not realize it to have a look at Rivian’s inventory chart.

RIVN Chart

RIVN information by YCharts.

All issues thought-about, Rivian has executed fairly effectively to date. However the way in which the corporate dealt with Copes’ departure is worrisome. Profitable public corporations are typically excellent at managing their traders’ expectations. A part of doing that’s holding traders knowledgeable of necessary developments. 

If Copes’ retirement was in truth deliberate for months, as Rivian now says, the corporate ought to have instructed us upfront — or on the very least, proper after he left. The truth that it did not was an error — a minor one, in context, however nonetheless an error.  

Let’s hope that the corporate resolves to do higher from right here.

This text represents the opinion of the author, who could disagree with the “official” suggestion place of a Motley Idiot premium advisory service. We’re motley! Questioning an investing thesis — even considered one of our personal — helps us all assume critically about investing and make selections that assist us develop into smarter, happier, and richer.

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