To The Moon

$Rivian Automotive, Inc.(RIVN)$Rivian is witnessing robust demand for its electric vehicles. But will the company be able to meet the strong demand, or will supply chain issues continue to impact production and drag down the stock further?

Like its other electric vehicle peers, Rivian Automotive (NASDAQ: RIVN) has also been under pressure due to chip shortages and supply chain bottlenecks. These issues, along with higher input costs amid soaring inflation, have pulled down Rivian shares by 74% this year.

Rivian currently manufactures R1T pickup trucks and R1S SUVs for the retail consumers, and EDVs or Electric Delivery Vans for the commercial market.

Financial Snapshot

Last month, Rivian posted an adjusted net loss of $1.43 per share on revenue of $95 million, compared to analysts’ estimates of a loss per share of $1.44, on revenue of $130.5 million. The company reaffirmed its production target of 25,000 vehicles for this year.

In its June 6 letter to shareholders, the company highlighted strong demand for its vehicles, with a backlog of over 90,000 R1 preorders and the initial order of 100,000 EDVs from its key shareholder, Amazon (AMZN).

With $17 billion of cash on its balance sheet as of the end of Q1, Rivian is optimistic that it can support the 2025 launch and ramp up of its R2 vehicle platform.

Wall Street’s Take

Earlier this month, D.A. Davidson analyst Michael Shlisky initiated coverage on Rivian stock with a Sell rating and a price target of $24. Shilsky cautioned investors about the execution risk with regard to the automaker.

Shlisky stated, “RIVN has done better than most with respect to its ramp-up of production. It remains to be seen whether RIVN can continue to accelerate production as smoothly as its remarkable vehicles can drive, especially as new facilities open.”

Meanwhile, Mizuho Securities analyst Vijay Rakesh believes that the pullback in Rivian stock coupled with high expectations could be an attractive entry point for investors as pre-orders and portfolio positioning seem strong. This sentiment is bolstered by Rivian’s improved focus and reorganization, which includes the splitting of the company’s retail segment from its commercial business.

Rakesh made these observations after hosting Rivian’s CFO, Claire McDonough, at his firm’s 4th Annual Auto Tech seminar. The analyst reiterated a Buy rating on Rivian stock with a price target of $80.

Overall, the Street is cautiously optimistic on the stock, with a Moderate Buy consensus rating based on eight Buys, five Holds, and one Sell. The average Rivian price target of $49.50 implies 84.63% upside potential from current levels.

Conclusion

While the demand and reviews for Rivian’s electric vehicles look promising, Wall Street analysts are currently treading carefully considering the uncertain macro backdrop, supply chain challenges, and concerns about Rivian’s ability to meet the robust demandity to meet the robust demand