By Claudia Assis
Rivian stock extends rally after mixed quarterly earnings
Rivian Automotive Inc.'s stock extended its rally Thursday as investors cheered the EV maker's intact goals for the year, but Wall Street expects the road to volume production to remain a bumpy one for Rivian.
Rivian (RIVN) stock rose more than 20% Thursday, after a similar rally late Wednesday following the company's first-quarter results. Rivian posted a wider loss than analysts expected and revenue also disappointed, but the EV maker kept its production guidance at 25,000 EVs this year.
Besides the good news regarding the production outlook, investors likely also cheered management's assurance that the $17 billion in cash on hand will be enough to launch the platform for a cheaper EV out of the future Rivian plant in Georgia, Alex Potter with Piper Sandler said in a note Thursday.
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"Assuming the company sticks to this plan, no capital raises should be required between now and 2025," Potter said. Management's comments "will help reassure jittery investors who are shunning unprofitable, capital intensive businesses like Rivian" amid the market downturn, the analyst said.
"We still think Rivian has the right strategy, brand, and products to be a long-term winner; macro headwinds notwithstanding," Potter said, keeping Rivian stock among Piper Sandler's top picks with a buy rating.
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Thursday's gains took some of the sting of steep recent losses for Rivian shares amid news that some of the company's major backers, including Ford Motor Co. (F), promptly sold shares as soon as the initial public offering lockup period expired.
Rivian stock is looking at a 14% decline for the week. The shares are down 76% this year, compared with losses of around 18% for the S&P 500 index.
Investors have become "increasingly concerned" about Rivian's need for additional capital on top of the pressure from the end of the IPO lockup, Joseph Spak with RBC Capital said.
The cash on hand seems to give Rivian a "clear path" to launch the platform for its cheaper EV platform, Spak said. The figure was much better than expected, likely because Rivian became more prudent with its product roadmap and operational costs, the analyst said.
Dan Ives at Wedbush put it more bluntly: "Rivian has been a train wreck since its IPO and an overall black eye for the EV industry," but it could be turning a corner.
"To say the Rivian story has been disappointing to us (and the Street) so far would be an understatement," Ives said.
From a core engineering and design point of view and its commercial relationship with Amazon.com Inc. (AMZN), Rivian "has potential to be a major EV stalwart over the next decade," Ives said.
"However, for that to happen they need to start delivering models to customers and stop the excuses."
(END) Dow Jones Newswires
May 12, 2022 14:28 ET (18:28 GMT)
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