Rivian Stock: Time to Jump in or Hold Your Horses?

Stock Market

Rivian (NASDAQ:RIVN), a major competitor to Tesla, has struggled to share positive updates for the past year and a half. Like many other aspiring automakers, its biggest challenge has been increasing production rates.

This hurdle is crucial for transitioning from a startup to a mass car producer, and it is a crucial step for the survival of electric vehicle upstarts.

In this article, we will delve deeper into the Rivian and discuss whether it is a good stock or not.

What’s Happening With Rivian

Rivian’s production is thriving, with a 268% increase in vehicle production and a more than 5X surge in deliveries compared to the previous year. This performance reinforces their target of reaching 50,000 annual vehicle production in 2023, setting them apart from smaller EV start-ups.

However, the future of Rivian remains uncertain. Not every EV upstart can replicate Tesla’s success, especially given the changing landscape.

Tesla faced its challenges when electric vehicles were not the primary focus of the auto industry. Traditional carmakers have entered the electric vehicle market with multiple models in their pipeline.

Rivian faced production challenges due to supply chain disruptions and increased raw material costs. The carmaker fell slightly short of its reduced production target, manufacturing 24,337 vehicles instead of the planned 25,000.

Rivian’s production is thriving, with a 268% increase in vehicle production and a more than 5X surge in deliveries compared to the previous year. This strong performance reinforces their target of reaching 50,000 annual vehicle production in 2023, setting them apart from smaller EV start-ups.

Recent Updates

Rivian Automotive announced that it will deploy its electric service vans in the upcoming weeks. By the end of the year, there will be over 200 Rivian Service Vans available to cater to the service requirements of more than 35,000 Rivian vehicles.

These vans will provide a range of services such as maintenance, repair, and vehicle-to-vehicle charging. Equipped with various tools and parts, including a wheel balancer, automated tire changer, and air compressor, the RSVs are well-prepared to meet the needs of Rivian vehicle owners.

Rivian recently disclosed its first-quarter results, revealing revenue of $661 million and a loss of $1.25 per share, surpassing the estimated loss of $1.59 per share. The company achieved a production count of 9,395 units with 7,946 deliveries.

Looking ahead, Rivian is targeting production volume of 50,000 units in 2023, including approximately 100 R1T trucks. The company plans to increase production even more in 2024 and achieve a positive gross profit.

Why Investors Remain “Invested”

Rivian Automotive announced the delivery of 7,946 vehicles in Q1 2023, aligning closely with the anticipated number of around 8,000 as per FactSet analysts.

The company also reported producing 9,395 vehicles during the same period. Rivian remains on course to achieve its goal of manufacturing 50,000 vehicles by year-end.

Rivian reported a narrower loss of $1.25 per share, exceeding estimates, with sales of $661 million. The company aims to produce 50,000 vehicles in 2023. RIVN stock rose nearly 6% after-hours. Reservations for Rivian’s R1 platform increased to 114,000.

Rivian, backed by Amazon (NASDAQ:AMZN), is leading the electric truck market with its R1T model, ahead of Tesla and General Motors.

The company’s Illinois plant can produce up to 150,000 units per year, with a focus on electric vans for Amazon. Currently, Amazon has 1,000 Rivian vans delivering packages in major U.S. cities, and they have placed an order for 100,000 electric vans.

While the R1T pickup has received attention, the vans are expected to contribute to revenue in the short term.

It’s a Tough Call

Rivian’s deliveries and revenue are increasing, but losses are expected to persist. Despite beating Q1 earnings, the stock is not a buy. It trades below its IPO price and has a low RSI rating at the time of writing. Monitor this EV startup as it tackles production challenges.

I remain optimistic about Rivian’s potential in the EV market, but caution is advised before investing in the company. Holders of existing shares should hold on, but new investors should exercise caution.

On the date of publication, Chris MacDonald has a position in AMZN. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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