Rivian (RIVN) Stock Is Selling Despite Production On Track, Here’s Why

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Key points:

  • Rivian reaffirms FY22 production guidance after first quarter production on track
  • RIVN stock continues to show strong selling pressure as investors remain unconvinced
  • The company should be able to reach the reduced target of 25,000 by the end of FY22

Rivian is one of the multitudes of electric vehicle companies that still have a lot to prove. Sure, Ford and Amazon’s backing sounds glamorous, but what’s the point? Investors don’t seem at all interested in the electric truck maker; putting pressure on a downtrend that is constantly looking for new all-time lows.

In all fairness, the economic landscape hasn’t exactly been ideal for automakers, and primarily for those who continue to chip away at the hard walls of consumer confidence. Various companies have had to cut planned deliveries amid supply disruptions; Rivian was one of them, cutting its FY22 production forecast by nearly half.

Also Read: The Best EV Stocks to Buy Right Now

All should not be catastrophic at Rivian. The company announced yesterday that production was on track to meet the new target of 25,000 electric vehicles, producing 2,553 in Q122. So why are investors still not satisfied? Shares of RIVN fell nearly 10% yesterday despite the positive news as it appears the market is expecting more from the company. Maybe Rivian hitting its target in slices isn’t that impressive, analysts and investors are looking for a strong financial outlook, but it could be tough when supply chain constraints act as a limiter at levels of impressive production.

As CEO RJ Scaringe pointed out:

“The biggest constraints we face today are really in the supply chain… It’s really a small number of parts where the supplier is not accelerating at the same rate as our production lines . Without the constraints of suppliers… we are convinced that we could reach over 50,000 vehicles this year.

Unfortunately, the emphasis is heavily on “could”. While the first quarter results suggest that Rivian is beginning to overcome some production bottlenecks, uncertainty still hangs over the company moving forward. If Rivian were to raise its production outlook in the event of a slowdown in operations, that could be reflected in the stock price.

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