Rivian Stock Plunges: Production Cuts and Financial Woes

Rivian Automotive's stock price took a significant hit on Thursday, November 14, 2024, following the company's third-quarter earnings report and reduced production guidance. The EV maker's shares fell by 7% in pre-market trading, reflecting investors' concerns about the company's financial health and production challenges.

Rivian's production and delivery guidance for 2024 played a significant role in the stock drop. The company announced that it now expects to build between 47,000 and 49,000 vehicles this year, down from its previous target of 57,000. This reduction in production was attributed to a supply shortage caused by a miscommunication with a supplier earlier this year, leaving Rivian without enough copper windings to hit its initial production target. Despite reaffirming its delivery guidance of 50,500 to 52,000 vehicles, investors reacted negatively to the production cut.

The company's financial performance also contributed to the stock drop. Rivian reported a net loss of $(1,100) million for the third quarter, up from $(1,367) million in the same period last year. The company's revenue also fell short of expectations, reaching $874 million compared to the estimated $1 billion. Gross profit was negative at $(392) million, though this was an improvement from the $(477) million loss in Q3 2023. Rivian's losses per vehicle increased to $32,705, up from $30,500 in the previous quarter. Despite reaffirming its 2024 delivery outlook, investors may be concerned about the company's financial performance and its ability to achieve profitability.

Analyst ratings and price targets for Rivian stock have been mixed in recent months. In November 2024, the average analyst rating was "Buy" with a price target of $15.67, indicating a 38.37% increase from the current stock price of $11.33. However, individual analyst ratings varied, with some firms maintaining a "Hold" rating and others upgrading their ratings, such as Stephen Gengaro from Stifel, who increased his price target to $16. This suggests a range of opinions on Rivian's stock potential, with some analysts more optimistic than others.

Rivian's partnership with Volkswagen could have positive implications for its stock performance in the long run. The joint venture, with an upsized investment of $5.8 billion, signals Volkswagen's confidence in Rivian's technology and potential. This could help Rivian secure additional funding, improve its financial stability, and accelerate its product development and expansion plans. Moreover, the partnership may open up new markets and opportunities for Rivian, potentially driving future growth and enhancing its stock value.

In conclusion, Rivian's stock drop on Thursday was driven by a combination of factors, including lower-than-expected production and delivery numbers, and concerns about the company's financial health. However, the company's partnership with Volkswagen and its long-term growth prospects may help to mitigate these concerns and drive future stock performance. As investors continue to monitor Rivian's progress, they should consider the company's production targets, financial performance, and strategic partnerships when evaluating its stock potential.