The share price of electric vehicle manufacturer Rivian (NASDAQ: RIVN) continues to struggle due to bleak projections for the company’s revenue and production estimates.
Notably, the stock has struggled throughout 2024 as the company has been weighed down by slowed demand in the EV market. As a result, RIVN is down over 50% year-to-date.
By press time, the stock had extended losses, trading at $10.37, down 4.5% from the close of the last trading session.
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Why RIVN stock is down
The significant correction can be attributed to DA Davidson’s October 29 investor note, which stated that Rivian presents ‘many uncertainties’ to investors.
Analyst Michael Shilsky maintained a conservative stance on the company, citing near-term production issues and supply chain dynamics.
“We’re not comfortable recommending the stock just yet, despite what we view as promising products, with so many uncertainties on the perimeter of the investment,” Shilsky said.
Shilsky stated that the stock will likely be affected in the fourth quarter due to potential ongoing supply chain challenges. According to the expert, Rivian’s projected production shortfall in the third quarter will likely weigh down on the equity.
To this end, DA Davidson maintained a ‘neutral’ rating for Rivian stock while forecasting a price target of $13. This outlook comes ahead of the EV maker’s third earnings report scheduled for November 7, 2024.
From a bullish perspective, the analyst stated that developments, such as Rivian’s first commercial on a major streaming network this quarter, initially anticipated for the R2 model release in 2026-2027, are considered a key marketing strategy.
Shilsky added that unveiling the Scout product, which offers greater range and a lower price than the R1, is a crucial bullish sentiment.
“We also saw the Scout product reveal last week–the product has more range and a lower price than R1,” he added.
Rivian’s production troubles
It’s worth noting that Rivian has witnessed a lackluster performance in recent weeks after the company revised its annual production guidance to be between 47,000 and 49,000 vehicles, down from 57,000, citing a “production disruption.” This disruption is expected to be felt in the third quarter.
This aspect has resulted in several adjustments to their price target for RIVN, with Truist lowering its projected valuation from $16 to $12 with a “Hold” rating. Likewise, Barclays cut its price target from $16 to $13, citing uncertainty about when the company’s supply chain issues will be resolved.
Therefore, the upcoming Q3 earnings results remain crucial for the company, as a positive update on the supply chain issues will likely sway investor confidence.
This comes at a time when EV trailblazer Tesla (NASDAQ: TSLA) is recording impressive returns after reporting better-than-expected Q3 earnings.
At the same time, investors will be looking closely at how Rivian positions itself to compete with Tesla in addition to existing measures.
For instance, the company plans to launch three new vehicles beginning in 2026: the R2, R3, and R3X. These vehicles are likely to debut below $50,000 and have a target of mass adoption.
Featured image:
Piotr Swat – October 29, 2024. Digital Image. Shutterstock.
