Rivian Stock Rises After Company Reaffirms Its 2022 Delivery Guidance

Rivian stock (NYSE: RIVN) is trading higher in US premarket price action today after the company reported its deliveries for the third quarter of 2022. It also maintained its guidance of producing 25,000 cars this year.

Rivian produced 7,363 cars in the third quarter and delivered 6,584. In the second quarter of 2022, it produced and delivered 4,401 and 4,467 cars respectively.

Rivian had produced 2,553 electric cars in the first quarter of 2022 and delivered 1,227 cars. It started delivering its vehicles only in September 2021 and produced only 1,015 vehicles in the year.

Rivian reaffirms 2022 production guidance

In the first nine months of 2022, Rivian has produced 14,317 cars. To reach the guidance of 25,000 vehicles, it would need to produce 10,683 cars in the final quarter of the year. Meanwhile, the stock is trading sharply higher today as markets give a thumbs up to its performance.

Notably, given the supply chain issues, almost all automotive companies are facing production bottlenecks. While Tesla delivered 343,830 cars in the third quarter of 2022, a new record for the company, the deliveries were below the 365,000 that analysts were expecting.

Tesla stock plunged after the Q3 delivery report

Commenting on its Q3 deliveries, Tesla said, “As our production volumes continue to grow, it is becoming increasingly challenging to secure vehicle transportation capacity and at a reasonable cost during these peak logistics weeks.”

It added, “In Q3, we began transitioning to a more even regional mix of vehicle builds each week, which led to an increase in cars in transit at the end of the quarter. Tesla stock plunged yesterday after reporting its Q3 deliveries. The delivery reports of Chinese EV (electric vehicle) companies including NIO and Xpeng Motors also failed to cheer the markets.

Rivian stock has whipsawed since the IPO

Rivian, which is backed by Amazon and Ford, went public last year and raised around $13.7 billion, which made it the biggest IPO of the year and the largest since Facebook’s 2012 listing.

Rivian’s IPO sailed through easily and the company priced the shares at $78 each, which was above the already increased price range. The stock had a good listing and went on to hit an all-time high of $179.47, which was over twice the IPO price.

At its peak, RIVN commanded a market cap of over $150 billion. Many saw it as a sign of optimism toward pure-play EV companies. However, there were skeptics, which included Tesla’s CEO Elon Musk, who found the valuation too high. Musk, who uses his Twitter account brilliantly to connect with his millions of followers, mocked the high valuations of Rivian.

EV stocks have plunged in 2022

However, as the fortunes of startup EV companies turned for the worse in 2022, Rivian stock crashed. It fell to an all-time low of $19.25 and its market cap fell below the cash on its balance sheet. However, the stock has since rebounded.

Investors have been getting increasingly wary of startup EV companies as many are struggling with production. Names like Nikola, Lordstown Motors, and Arrival have plunged this year as they continue to disappoint with their execution.

Even Lucid Motors which was once hailed as the “next Tesla,” has plunged. The Peter Rawlinson-led company has slashed its delivery guidance twice this year amid the supply chain woes.

Analysts are bullish on Rivian stock

Some Wall Street analysts are bullish on Rivian despite the plunge. Bank of America is bullish on RIVN and in a client note in August it said, “Despite what seems to be a tougher 2022 than initially envisioned and stock market volatility that has created challenges for some start-up EV OEMs in getting much needed low cost capital, our Buy rating on RIVN is predicated on our view that the company is one of the most viable among the start-up EV automakers and also a relative competitive threat to incumbent automakers.”

Rivian currently has two models, the R1T pickup truck and the R1S sports SUV. It is also producing delivery vans for Amazon. The volatility in RIVN stock has also impacted Amazon and Ford, its two biggest stockholders. While both Ford and Amazon booked billions of dollars of mark-to-market gains on Rivian in the fourth quarter of 2021, they have booked massive losses in the first half of 2022 as RIVN stock crashed.

Truist sees RIVN stock running higher

Truist is also bullish on Rivian stock.  In a client note last month, analyst Jordan Levy said, “As Rivian pushes through the formidable challenges of ramping 4 different vehicles amidst a historically difficult supply chain backdrop, we believe the market will come to see Rivian not just as a successful EV manufacturer with a powerful partner in Amazon, but as a leading example of a next-generation diversified mobility tech powerhouse.”

Levy is also optimistic about RIVN’s partnership with Amazon. He said, “We see Amazon’s initial purchase of 100,000 EDVs through 2030 underwriting steady growth in RIVN’s commercial segment and driving meaningful demand from other fleet owners moving into the latter half of the decade.”

Rivian is ramping production

Thanks to its massive IPO and the strong cash position even before the IPO, RIVN has a strong balance sheet and holds around $15 billion as cash and cash equivalents. Rivian also announced its second plant in Georgia. The plant would have an annual capacity of 400,000 vehicles and the construction is expected to begin in 2022. The company expects to roll out vehicles from the plant, which would be built at a cost of $5 billion, in 2024. It is also increasing the nameplate capacity of its Illinois plant to 200,000 vehicles annually.

However, Rivian received a jolt when Georgia’s state court rejected the incentive plan for the plant. The company hasn’t yet commented on the decision.