Electric vehicle manufacturer Rivian’s (NASDAQ: RIVN) share price is recording losses following the company’s release of new production guidance for 2024.
Rivian has faced sustained weakness, struggling to establish a foothold above the $10 support level. Over the past month, the stock has corrected by 22%, while its weekly chart reflects an almost 10% drop. The downward trend extended into the October 4 trading session, where RIVN was valued at $10.28 as of press time, marking a 4.6% drop in the past 24 hours.
The decline began before the market opened, with the stock down more than 7% in premarket trading.
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Why is Rivian stock plunging
Rivian’s current trading pattern can be viewed as a reaction to the announcement of a production disruption due to a component shortage impacting the R1 and RCV platforms. The American EV manufacturer stated that the supply disruption was primarily felt in the third quarter and accelerated in recent weeks.
Consequently, the company lowered its annual production forecast from 57,000 units to around 47,000 to 49,000 vehicles.
Indeed, Rivian recorded disappointing figures for the 2024 third quarter, delivering 10,018 vehicles, a 35.6% decrease year-over-year, while production dropped 19.3% to 13,157 vehicles.
This development casts further doubt on Rivian’s ability to compete with industry leaders such as Tesla (NASDAQ: TSLA), which posted impressive results in line with analyst estimates. Tesla’s Q3 2024 deliveries hit 462,890 vehicles, up 6.4% year over year and 4.3% quarter over quarter. Production stood at 469,796 vehicles, up 9.1% year over year.
Meanwhile, analysts have shared their outlook on RIVN stock after revising the production figures. For instance, in a note on October 4, Truist Securities maintained its ‘Hold’ rating for Rivian while placing a price target of $16.
In the short term, the analyst noted that Rivian would likely be impacted by the supply disruptions, considering that the firm failed to offer comprehensive information regarding the component shortage’s nature, magnitude, and expected resolution timeline.
At the same time, Truist Securities foresees a negative impact on RIVN, citing the unresolved deal and associated equity investment with Volkswagen, which is still pending.
On the other hand, on September 25, banking giant Morgan Stanley (NYSE: MS) downgraded the equity in an investor note. The analyst questioned Rivian’s ability to compete in the current market and set a target of $13, down from the previous $16.
Rivian stock price technical outlook
From a technical perspective, stock trading expert Peter DiCarlo, in an X post on October 3, suggested that the stock is approaching a pivotal moment. DiCarlo stated that Rivian has seen a pullback from highs above $16, creating a setup for buyers seeking value.
If this buying materializes, the stock may stage a rebound, potentially rising as much as 73%, targeting the $18 mark within the next 77 days. Such a price movement, if it materializes, will push RIVN to the coveted $20 mark.
Another analyst with the pseudonym MarketMaestro also shared this bullish outlook in an X post on October 4 and observed that Rivian is forming an inverse head and shoulders pattern.
As per the analysis, the stock trades in a buy zone around $10, with a key resistance level of $23.25. A breakout above this could see Rivian fill a volume gap and climb toward the $30 mark. He observed that institutional buying remains strong, supporting a potential upward move.
In conclusion, Rivian’s stock is under notable pressure and faces the challenge of sustaining its valuation above the $10 mark amid a mix of bearish and bullish sentiment shaping its near-term trajectory. Therefore, the company needs to offer reassurance to investors regarding measures to turn things around concerning resuming normal production.
