To The Moon

Based on the joint venture with Volkswagen, investors are bracing for significant volatility for $Rivian Automotive, Inc.(RIVN)$ today. The options market indicates an implied movement of 10.57%, with the stock currently priced at $14.76. This positions the upper bound at $16.32 and the lower bound at $13.20, suggesting a potentially wide trading range ahead of the earnings announcement on June 28, 2024​ (Rivian — Electric Adventure Vehicles)​​ (markets.businessinsider.com).

Recent Developments and Financial Health

Rivian recently announced a landmark joint venture with Volkswagen, which includes a strategic investment of up to $5 billion. This partnership aims to develop next-generation electric vehicle (EV) technology, a move that has already buoyed Rivian’s stock by 30%​ (Stock Analysis)​​ (MarketBeat). The capital infusion is expected to bolster Rivian’s financial stability and accelerate its technological advancements, providing a much-needed lifeline as the company navigates its path to profitability.

Despite these positive strides, Rivian’s financials remain challenging. The company reported a significant loss per vehicle of $38,784 in Q1 2024, slightly improved from the $43,472 loss in Q4 2023. CEO RJ Scaringe has cautioned that Q2 earnings will likely be “messy” due to a planned month-long shutdown aimed at upgrading production lines and negotiating new supplier contracts​ (Electrek)​​ (markets.businessinsider.com)​. These improvements are expected to yield long-term cost reductions and efficiency gains but will temporarily impact the company’s financials.

Market Reaction and Analyst Insights

The recent partnership with Volkswagen has injected a dose of optimism into the market, with several analysts revising their outlooks. Guggenheim recently set a price target of $18 for Rivian, reflecting confidence in the company’s long-term prospects despite near-term hurdles​ (Fox Business)​. However, Barclays downgraded the stock to “Equal-Weight” from “Overweight,” citing the ongoing financial pressures and the uncertainty surrounding the execution of Rivian’s strategic initiatives.

Technical Analysis and Options Data

From a technical standpoint, Rivian’s stock presents a mixed picture. The 50-day and 200-day simple moving averages (SMAs) signal a bearish outlook, reinforced by the recent “Death Cross” formation. This technical setup suggests that the stock may face selling pressure soon. Additionally, the put/call ratio stands at 0.75, indicating more calls than puts, which typically signals bullish sentiment among options traders​ (markets.businessinsider.com)​.

As Rivian approaches its earnings date, the market is poised for substantial volatility. The company’s efforts to streamline operations and secure strategic partnerships are commendable, yet the immediate financial outlook remains uncertain. Investors should prepare for potential fluctuations in the stock price, with the options market suggesting a significant movement.