Rivian Faces a Dreaded Triple Whammy. Can the Stock Recover?
Rivian (NASDAQ: RIVN) just drove in its second quarter that certainly felt negative impacts from multiple angles. The company reported a 13% rise in revenue to $1.3 billion and a narrowing net loss of $1.1 billion compared to the prior year's $1.5 billion, and reaffirmed its delivery guidance of 40,000 to 46,000 vehicles. Rivian also reported its full-year adjusted EBITDA loss is expected to be between $2 billion and $2.25 billion, worse than the prior forecast of $1.7 billion to $1.9 billion. Let's take a quick look at the triple whammy sending speed bumps at the young electric vehicle (EV) maker.
When it comes to easy money, it doesn't get much easier than EV makers selling zero-emission, or regulatory, credits. Essentially, automakers that produce EVs are given credit for meeting emissions standards, while vehicles that don't meet emissions standards are fined. One way to get out of the fine is to simply purchase regulatory credits from automakers such as Rivian that don't have an internal combustion vehicle portfolio to offset.
However, the Trump administration recently did away with the penalty for not meeting emissions standards, and thus removed the incentive to buy these regulatory credits. That's a significant, and sudden, removal of a vital chunk of business for Rivian. Now Rivian expects to receive no more revenue for the credits and for regulatory credits to generate roughly $160 million in 2025, down from the prior expectation of $300 million.
Source Fool.com
