In current weeks, Rivian Automotive (NASDAQ:RIVN) has began to make a gradual transfer to greater costs. After hitting a brand new all-time low throughout mid-March, throughout the previous couple of buying and selling days of the month, buyers warmed again as much as Rivian inventory.
This was as a consequence of hypothesis that the electrical automobile (or EV maker) would beat estimates with its supply and manufacturing figures for the quarter ending March 31, 2023. Sadly, when the corporate launched precise numbers, as an alternative of unveiling a pleasing shock, outcomes as an alternative have been combined at greatest.
That stated, RIVN inventory solely skilled a modest, short-term pullback in worth on this information. This can be maybe as a consequence of the truth that, whereas outcomes final quarter hardly set the world on hearth, administration hinted that it’s nonetheless on monitor with its annual manufacturing goal.
That stated, whereas the most recent information isn’t doing a lot to curb investor optimism, don’t assume that this may proceed.
The Newest With RIVN
Per Rivian’s Apr. 3 deliveries/manufacturing launch, the corporate produced 9,395 of its electrical vans and vans, delivering 7,946 of them to prospects. Whereas these numbers have been in keeping with expectations, they represented a decline in comparison with what was reported within the previous quarter.
Moreover, as talked about beforehand, hopes ran excessive forward of the corporate’s manufacturing/deliveries launch, and never merely on account of wishful considering. As InvestorPlace’s Samuel O’Brient reported on March 30, per figures from Kelly Blue ebook, there have been a complete of 8,145 Rivian automobile registrations through the quarter.
The market took this to imply that the corporate would report a a lot greater supply determine. Thus, this defined final week’s uptick for Rivian inventory. Nonetheless, there are indicators that this sequential drop in manufacturing could also be short-term. Alongside the numbers, administration reiterated its 2023 manufacturing goal (50,000 automobiles).
That’s not all. A significant factor behind the manufacturing lower was the corporate’s pausing of business van manufacturing in February, so as to combine new battery know-how. With all of this in thoughts, it is smart that this information solely briefly took the wind out of RIVN’s newest rally.
Why Rivian Inventory Stays Weak
This month, Rivian inventory could have a robust likelihood of holding regular within the mid-teens per share. Nonetheless, this might begin to change on Might 9. That’s when RIVN subsequent experiences quarterly earnings.
Traders are already conscious of the manufacturing/supply figures for Q1. The corporate stays assured in its capability to ramp up manufacturing this yr. All of this may occasionally appear to level to a combined response to earnings. Nonetheless, one other key concern may re-emerge post-earnings – Rivian’s money burn drawback.
Because the Wall Road Journal identified again in March, Rivian burned by means of $6.4 billion in money throughout 2022, and its money burn is predicted to remain excessive for a number of years. Thus, it stays extremely possible that this early-stage EV maker might want to promote extra shares to lift money down the street.
Like I’ve argued earlier than, promoting extra shares means extra dilution, which can put extra stress on the inventory. To not point out, this motion will restrict its upside potential within the occasion Rivian efficiently scales up right into a worthwhile enterprise. Dilution worries have fallen to the again burner these days, however could return when the corporate’s financials are as soon as once more in focus.
The Finest Transfer Now
Dilution isn’t the one situation that would screech a doable rebound for RIVN inventory to a halt. Considerations about rising competitors may re-intensify. This upstart could also be maintaining comparatively properly towards Ford (NYSE:F), as soon as considered one of its backers, and now considered one of its key opponents.
Nonetheless, it’s not solely Ford that Rivian wants to fret about. Different incumbent automakers are shifting into the electrical pickup truck house. Tesla’s (NASDAQ:TSLA) Cybertruck, if/when it lastly begins to roll off the manufacturing line, may give Rivian’s R1T a run for its cash as properly.
In brief, there’s nonetheless extra on the market that would push RIVN inventory all the way down to new lows, relatively than ship it again up above $20 per share. That’s to not say you’ll want to keep away completely.
On the proper worth, Rivian inventory could also be worthwhile as a small, speculative place. For now, although, watch out.
On the date of publication, Thomas Niel didn’t maintain (both instantly or not directly) any positions within the securities talked about on this article. The opinions expressed on this article are these of the author, topic to the InvestorPlace.com Publishing Pointers.
