Rivian (NASDAQ:RIVN) has mostly faced a hard slog in 2024, and last week was no exception. Shares continued their downward trend (the stock has shed 55% year-to-date) after the company’s quarterly production and deliveries announcement failed to impress.
The company produced 13,157 vehicles in the quarter, below the Street’s 14,700 forecast while deliveries reached 10,018, also falling shy of the 11,800 expected by the analysts.
The EV maker laid the blame at a component shortage affecting both the R1 & RCV platform, stating that the supply shortage started having an effect during the quarter and has intensified in recent weeks. That resulted in the company lowering its FY24 production guide by ~16% (~9,000 units at the midpoint).
According to Truist analyst Jordan Levy, this downturn was unexpected. “While the company had previously discussed the supplier issue associated with a 3rd party component in the company’s in-house Enduro motors, the magnitude of the impact is likely to surprise investors,” he commented.
On the plus side, Rivian stuck to its FY24 delivery guide of between 50,500 – 52,000 vehicles, a factor Levy thinks might go some way to assuaging investor concerns. However, lack of details on the nature, scale, and expected duration of the component shortage and how it will affect the production and gross margin outlook, are likely to weigh on the shares.
Rivian has targeted turning gross profit positive by Q4 but the latest announcement wasn’t accompanied by a message it was still on track to do so. As such, on the assumption that over the “very near-term” the shortage doesn’t improve, Levy thinks that is now unlikely.
Meanwhile, with no further news regarding when the Volkswagen deal (and its associated equity) is expected to close, the announced production issues and implications on GM (gross margin) targets could have a “magnifying negative impact on the company’s shares.”
To this end, Levy rates RIVN shares a Hold (i.e., Neutral), although he might as well have just said Buy. That’s because while Levy thinks the shares could be under further pressure, he still sees plenty of upside here; his $16 price target implies the shares will gain 53% in the year ahead. (To watch Levy’s track record, click here)
What does the rest of the Street think? Looking at the consensus breakdown, opinions from other analysts are more spread out. 11 Buys, 9 Holds and 2 Sells add up to a Moderate Buy consensus. In addition, the $17.24 average price target indicates a ~64% upside potential. (See Rivian stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
