Rivian Earnings Impressed Wall Street. The Stock Is Falling Anyway.
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Wall Street is feeling better about Rivian stock. Improving production and better cost control are two reasons why.
Alisha Jucevic/Bloomberg
Electric-vehicle start-up
Rivian Automotive
reported better-than-expected second-quarter numbers on Tuesday evening and increased full-year production guidance. Wall Street is happy, but the stock is falling.
Rivian (ticker: RIVN) reported a second-quarter loss of $1.08 per share on sales of $1.1 billion, while Wall Street had been looking for a loss of $1.43 per share on sales of $1.1 billion. What’s more, Rivian now expects to produce 52,000 vehicles, up from May guidance for 50,000 units.
Along with boosted production guidance, Rivian also trimmed its full-year operating-loss guidance to $4.2 billion from $4.3 billion.
Rivian stock was up 0.8% in premarket trading, but those gains have faded and shares are down 8.4%, at $22.71, in midday trading. The
S&P 500
and
Nasdaq Composite
are down 0.6% and 1.1%, respectively. Coming into Wednesday trading, Rivian stock was up 79% over the past three months. Higher production and a stock market rally have boosted shares.
Investors might be taking some profits. Nevertheless, Wall Street seems happy with the results. Analysts’ price targets are going up.
Canaccord analyst George Gianarikas took his price target to $44 from $40 a share. He rates Rivian stock Buy. “Rivian is decoupling from its peer group of EV insurgents, regaining its operational footing, and reviving its mojo,” he wrote in a Tuesday report, noting that the production guidance increase was the first increase in Rivian’s history as a publicly traded company.
Wedbush analyst Dan Ives took his target to $32 from $30 and kept his Buy rating on shares. “This quarter was a great step in the right direction to regain confidence in the eyes of the Street,” Ives wrote in a Tuesday report. “Management has been transparent on objectives while executing as we can see in the company’s print.”
Baird analyst Ben Kallo rates shares Buy, too, and he lifted his price target to $30 from $27 after earnings. “Cost improvements have begun to materialize as Rivian brings key components in-house, with more to come,” wrote the analyst in a Tuesday report. “We are encouraged by Rivian’s steady progress and believe the long-term outlook is strong.”
Even less-bullish analysts were a little bit impressed. RBC analyst Tom Narayan, who has a Hold rating on Rivian stock, lifted his price target to $15 from $14 after earnings. The higher price target is still significantly below the $24.80 shares closed at on Tuesday.
“Even though we are big fans of management’s execution on the R1 product and impressed by the cult following that the brand garners, we believe that R1 is close to its steady-state demand level of about 50,000 units annually,” wrote Narayan in a Tuesday report.
The R1 platform is the company’s first vehicle platform and produces the R1T truck and the R1S SUV. That level of demand isn’t enough to fill a plant or generate profits. “We see price cuts on the horizon and significant risk to achieving the units that it would need to make the math work from [the] current $25 [stock price],” Narayan added.
Overall, the average analyst price target went up a couple of dollars after earnings to just below $28 from just above $25.
About 54% of analysts covering Rivian stock have Buy ratings. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.
Write to Al Root at allen.root@dowjones.com
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