Well, Rivian posted some numbers and while things are getting slightly better, let's just put it this way, things are only getting slightly better. They are still burning cash and over a fist. Their goal was is now to produce 50 000 electric vehicles in a year. They had a goal of 25 000.

Vehicles They did slightly miss that gold coming in at just over 24 000 vehicles. I Mean that's not bad. Okay I don't want to take that away from them. Uh, obviously they manufacture pickups SUVs Amazon Vehicles They mainly blame Supply chains as a limiting factor in terms of why they are not able to produce as many vehicles.

This comes at the same time as they've stopped disclosing the number of net new pre-orders from customers. That number did stand at about 114 000 as of early. November I actually was one of those people who pre-ordered Rivian, but now I'm not taking delivery of Arabian because I'm spending too much money on investing in my businesses. That's okay I don't need more cars I think I put six or seven thousand miles on my my car in the last 18 months that have had the darn thing.

So anyway, regarding Iridium, they, uh, they when it comes to some of their numbers I think it's It's just worth going straight to the numbers and seeing what we're facing because you know some of the numbers. Okay, getting slightly better, but again, we're going to want to pay attention to what is this gonna mean. Long term for the business. over at Rivian is Rivien, the kind of business that you want To invest in now.

I've been pretty critical of Rivian not just here on YouTube but also on Twitter At one point I was shorting Rivian I'm not shorting Rivian right now I Just want to be very transparent about that. but I Do want to provide perspective because I do think there are some red flags that if you're an investor in Rivian, you want to be a pay attention you want to pay attention to. If you're not an investor in Rivie, then at least explore some of the things that we're talking about to understand some red flags that you want to pay attention to. So let's jump into.

Uh oh okay, all right. well the darn iPad's gonna be a little funky with the way it displays this again, but that's okay. So um, what do we have here? We've got the Rivian Q4 shareholder letter and some of the things to pay attention to. is there costs of Revenue increased only about 14.4 percent.

Quarter over a quarter. Now their revenue increase increased about 23 percent. That means they're actually expanding their gross margin. Uh, which is good.

It in other words means they're losing less money. Remember this? Uh, back in, uh, we were. Let's see here. last quarter, Arivian was spending about two dollars and 71 cents just to get a dollar of Revenue.

So think about that for a moment. This is not a net income calculation. This has nothing to do with your operating expenses or your advertising or anything. It's literally just to say that Rivian spent two dollars and 71 cents to be able to get uh, one dollar of Revenue That's not ideal, right? Obviously, that's not ideal because it means you're spending a lot of money to be able to get less money.

Not ideal, right? there we go. iPad Problem fix. So what do we have? Uh, when we keep going or or look at this quarter's numbers, we see that that loss uh has fallen. Now we're only looking at about 2.51 lost for every dollar of gross profit they're making.

Their net income is even worse. So you know, obviously the net income is is a problem. They're losing a lot of money. They're losing about 1.73 billion dollars.

Uh, but that's okay. let's ignore that for a moment. and at least what we're seeing is they're trending towards more profitability. But you've got a long way to go.

A lot of people get upset at me because they think oh, I only care about Tesla Uh, and what they do is they say hey, well Tesla in the early days lost money as well. But if you actually go back to 2014, remove any kind of vehicle tax credits that Tesla got Tesla was still profitable on a gross margin basis. You could go all the way back to 2014. And Tesla when Tesla produced about 7 700 vehicles and what you ended up finding was oh, wow, Tesla was profitable in 2014 on a gross profit basis, they were making about uh, 20 bucks for every 100 of Revenue with 7 700 Vehicles produced without tax credits.

So think about that really clearly for a moment without tax credits, Tesla managed to make 20 bucks on 8 000 Vehicles about 8 000 vehicles on a hundred dollars spent. So I think the easiest way to visualize that is like this or rather, a hundred dollars of Revenue equaled twenty dollars gross profit for Tesla in 2014 with about 8K Vehicles right? No credits? That's without credits. It was even better without credits. Today you have rivian.

A hundred dollars of Revenue equals uh, 251 dollars of gross loss. gross loss. Okay, so we're nowhere even close to profitable margin here. Uh, at about the same Vehicles produced, right? So that's your red flag.

That's what you're running against. Here is now. The rivian is really, uh, beautiful. I Have to say uh I was just in Arabian I went to Reading California The realtor was amazing.

He showed me his rivie and I drove in his rivian. The thing is beautiful, but it looks like the warthog of cars. It's absolutely gorgeous. Like you look at the car and you're like, please be profitable because I want more rivians, right? But the problem is, it's not.

It's not anywhere near close to profitable and you could see that in the numbers here Now I Want to show you where they're cutting? But something I want to remind you when we talk about cutting is one thing that's not getting cut or the prices and the courses and building your wealth. Today was the last day we're keeping the prices at this flash sale level. In honor of investor Day, we're raising the prices after today. in honor of investor Day, prices are going up.

So if you want to get the best price guaranteed going forward, uh, and this is the same promise we have for people who bought the course in the past. You can always email us if you think there's uh, there's an issue, but this is the best price you're going to get going forward. Uh, send us an email Kevin.com if you want to bundle up. But uh, today we will.

After today, we'll be raising the prices on the course. So if you want to get lifetime access on those for building your wealth in stocks or real estate or my perspective on entrepreneurship being an employee, real estate agents YouTube Whatever. check out those courses linked down below. You get lifetime access to any of them, including the course member live streams.

Okay, so uh, where they are cutting here though is they're cutting Opex quarter over quarter they cut Opex 7.2 percent. Year over year, they over halved Opex So they're really trying. They're cutting down their research and development. They've almost have their research involvement year over year.

They're cutting down their SG A also almost having that year over year. So they're trying. But that cost of goods uh, cost decline is not something I would touch with a 10-foot Pole Right now, it's very, very scary I Want to see them actually get close to break even now they say in their earnings call, oh, don't worry, we think we're going to be gross margin Pro Profitable by 2024 I Personally, don't believe that this is their uh, their earnings call and I Want to say the Highlight uh moment was okay. They're talking about bringing on their second shift.

Oh yeah, over here, they've got a goal of being gross margin profitable in 2024. I Personally, highly doubt they can pull that off. Hey, maybe their second shift is gonna bring them closer, right? Maybe they can only spend a hundred dollars for every hundred dollars of gross profit they bring in, right? That would put them at basically zero margin. That would be fantastic.

But right now they're spending 251 dollars per 100 of Revenue on a gross margin basis. That's horrible. It's really, really bad. now.

They have these grandiose visions and this is where I have a big concern for Rivien. Okay, watch this. So not only do they have these visions of being able to get to profitability gross margin profitability in 2024, 2025, they think they can. They could fund themselves through 2025.

So they're basically trying to say hey, look, we're not planning on diluting investors. We think we can get to 2025 profitability without having to dilute investors more. That's great I Don't believe it I'm coughing because I'm allergic to. but you know, hey, maybe they can pull it off.

but this sounds crazy. They say they see a clear path to 25 gross margin like they in other words by burning 251 dollars per quarter right now only down from 271 dollars of burn on a gross margin basis per 100 of Revenue. They think from that they can go to a profitable 25 per 100 of Revenue on a gross margin basis. That's a Tesla kind of Target They think they can achieve that.

Hey, if they can. Fantastic. But you want to see how they plan to achieve that and this is where I Literally just wrote What The F Okay, they think that they're going to increase their margin by reducing their cost of goods sold per vehicle made. Okay, hopefully maybe your second shift will help you with that, because right now it's disgusting where you are I Mean if you sell a car for eighty thousand dollars, you're spending over 160 170 000 to get that.

Revenue I Mean think about it. all you have to do is multiply it by 2.5 So their average vehicle selling price is about eight hundred thousand or eighty thousand dollars. Holy smokes, That means right now it costs them Two hundred thousand dollars to get an eighty thousand dollar car off the line. That's insane.

That's actually an even easier way to put it. It costs Rivian Two Hundred thousand dollars to make an about eighty thousand dollar, uh, average selling price vehicle right now now I can tell you the exact average selling price I Wrote it down and that was the Q3 I believe I wrote it right here. Eighty Two thousand Three hundred dollars is the current average selling price. So the average selling price right now is eighty Two thousand Three Hundred dollars.

Uh and uh. They think they can make their vehicles profitable, so somehow bring that gross costs down from two hundred thousand dollars a vehicle to eighty two thousand Three hundred. But actually not just that, they think they can get their costs to 25, right? or 75. So they think they can actually get to their goal which is a fair goal to have is 61 725 of cost for an 82 300 vehicle.

But this is where the WTF moment is for Rivian. Okay, you ready for this? They think they can actually improve on their average selling price per vehicle. They are already selling the cars for eighty two thousand three hundred dollars and they think they can raise the prices even more. And there's I mean what do you want to sell them like Lucid pricing or something like that and start selling them for like 200 000 a car? It's insane I Don't know I Don't see it.

It seems it seems ludicrous to me. That's Q3 there. Here's Q4 Uh, what do we have on actual cash flow? They're burning. Uh, their cash free cash flow right now is a negative.

4.4 billion dollars. Uh, but they do have cash. You know, you know where they got this cash from folks from you. If you were a retail investor, they should be sending you a thank you card because they built up an 18 billion dollar cash pile.

and In Fairness. Hey Oh, I'm sorry, that's now down to 11.5 billion. That was the 21, uh 2021 number. Well anyway, that's where they got the money from, right? They did a direct listing, they saved on underwriting fees, and they took advantage of retail momentum thinking that this was the next Tesla And because people thought this was the next Tesla they threw money hand over fist at the stock, giving the company.

now what's 11.5 billion dollars in cash left? They've got some in inventory, they've got plant property, and Equipment Fine, that's great. We've got some payables over here of only about two billion dollars. They've got maybe a, you know, some long-term debt over here, so call it three billion dollars. They've got free and available cash.

I Would call it free cash of somewhere around eight billion dollars. That's fantastic. That should give them about one point. You know, seven, five ish years before needing to raise money, which is roughly 20 25.

that's when they actually think they can be gross profitable. That's fantastic. You know, if all things go great, maybe they can pull it off. But let me just say, you know, going from a where's that earnings call going from? Uh, you know, spending 200 000 on a car that costs eighty two thousand three hundred dollars I Don't know man.

good luck. That's all. I'm saying. good luck, Rivian.

Uh, you know, like and if I were an investor, those are the things I'd be paying attention to again. Maybe with the second shift, they can get that cost substantially down. Maybe maybe we'll only spend 150 000 a vehicle. He's still a far cry from eighty two thousand three hundred dollars.

I Don't know how much really the second shift is going to make a difference. Get it and get more Vehicles off the line it should. Is it going to double production? Maybe I Mean at these numbers, if you are able to double production in theory, you could get the cost per vehicle down to a hundred thousand dollars. So if you have a perfect scale, right? So in other words, you open up a second shift and you perfectly double production, you're still going to have an increase of cogs, right? because you have material costs and labor costs that go into it.

But let's just say they could double production without doubling costs. Well okay then you bring the cost per vehicle down to 100 Grand So you're still losing 20 grand on a gross margin basis per vehicle. But you're not going to be able to double it that way because you're going to have increased labor and and a material costs. So even though you're manufacturing may be twice as many cars, you're not going to get twice the benefit.

So you're still going to be losing 120 130 to 150 000 per or spending 130 to 150 000 per 80 000 vehicle. It still does not make sense. The numbers are very very bad and all you have to do is go look at Teslas in 2014. Uh, and when they were manufacturing 8 000 vehicles and they're not that bad.

These numbers are are a company that looks like it potentially will never be profitable and that's scary. They'll probably have to go bankrupt or get acquired by someone else or raise their prices substantially for their vehicles. I Don't see that happening. If they can't raise the prices for the vehicle substantially, then they're potentially on the course of bankruptcy or they just start putting less expensive stuff in the cars.

But then at that point if they start cheaping cheapening out on the car which is beautiful right now. Absolutely beautiful. Some of the stuff they put in the car right now. gorgeous.

If they start cheaping out on it, well then why would you buy a ravine over a Tesla which Tesla has the autonomy which Rivien doesn't. You know Rivian has like adaptive cruise control. It makes no sense to me. I Don't know, You know, maybe maybe I'm just like passionately concerned, we'll call it that.

I'm like the Doctor Who's you know, yelling at somebody who has a terrible diet trying to say, would you just eat some salty nuts please like get some good fats in you That's just not what I feel like right now Yeah, I'm not saying they can't survive off, you know, a rib eye and a Cheesy hamburgers and prime rib dips. but they're probably gonna die of a heart attack. You know? Is there a chance they won't Sure, but they're playing with fire. That's all I'm saying about Rivia Okay, I look beautiful car.

I Just want to be so crystal clear because I'm not trying to offend Rivie notice. In fact, you know what? I think. If you buy a Rivian, you are getting a 200 000 car for 80 grand. That's the way to look at it.

You win if you're the customer at Rivian, unless of course there are a bunch of service issues that come up in the future. But assuming that's not an issue, you win. If you're a Rivian customer because you are basically robbing Rivien, you are getting an 80 grand car or a 200 000 car. basically for for you know, 80 grand, you win.