Rivian (RIVN) stock falls below $100 for the first time
Rivian (RIVN) stock hit a new low Friday morning as it sank about 15% one day after the company anounced that 2021 vehicle production will be lower than expected.
The stock fell below $100 for the first time since the company went public on an IPO that raised $11.9bn (£8.98bn) in November. Shares were trading at about $97.75 mid-day on Friday.
With Friday’s price plunge, Rivian’s stock continued a roller coaster ride. The price had moved up or down an average of about 7.3% a day since the IPO, according to MarketWatch.
But Wedbush analyst Daniel Ives urged investors not to worry by repeating an earlier outperform rating and $130 price target for Rivian.
Company in ‘catbird’s seat’
“With the popularity and consumer demand for EVs on the trucking/SUV market, we believe Rivian is in the catbird’s seat to take considerable market share in this EV arms race under its visionary CEO and founder RJ Scaringe,” wrote Ives in a client research report that he provided to Capital.com.
Rivian has begun rolling out its R1T pickup truck and commenced production on a delivery van to be used initially by Amazon. The company aims for production of its R1S SUV to begin in earnest in 2022.
Vehicle production will fall “a few hundred vehicles short” of the initial 1,200 target, Scaringe told analysts Thursday 16 December after Rivian issued its first quarterly earnings report as a public company.
He cited a production ramp-up at Rivian’s Normal, Illinois factory and component shortages as reasons for the delay.
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Wall Street will be disappointed
“The Street will be disappointed to see a delivery shortfall,” Ives wrote. “However, this is a supply issue and clearly not a demand issue for Rivian, which remains the lynchpin to our bull thesis over the next 12 to 18 months. That said, with a lofty valuation relative to near-term numbers, the last thing the Street wanted to see for Rivian was a curtailing of growth/deliveries right out of the gate.”
Ives estimated that production will fall roughly 300 units short of Rivian’s goal.
Supply help on way
A second Rivian factory to be built east of Atlanta, Georgia, will help the company ramp up production, according to a company announcement Thursday.
Rivian will break ground on the plant in 2022, and vehicle production is expected to begin in 2024. The company said the facility will have a maximum annual production of 400,000 vehicles.
Ives wrote that the new plant will be a “key production artery for the company in coming years.”