Why Is Rivian Stock Down After Its Earnings Call?

Following a spectacular start to publicly traded life, Rivian has seen its stock plummet following a mixed earnings report late last week

Dec. 20, 2021

Rivian (NASDAQ: RIVN) burst onto the stock market in November with the largest IPO of the year and the sixth largest of all time. The electric vehicle (EV) company soared initially, flirting with a valuation of $100 billion. However, following the company’s first quarterly earnings report things aren’t looking quite so rosy for the California-based EV manufacturer.

What Does Rivian Do?

Rivian manufactures and sells EVs. It has focused specifically on the lucrative pickup truck and SUV sector and has benefitted from beating both Tesla and Ford to market with its flagship pickup – the R1T.

Rivian’s Quarterly Results

Rivian’s reported a loss per share of $12.21 on revenue of approximately $1 million. This largely fell in line with estimates the company had released to the public as part of its November IPO. Worryingly, however, the company announced that it expects to fall short of its targets for vehicle production this year by “a few hundred vehicles.” The company had planned to produce 1,200 vehicles this year but supply chain issues and issues in scaling production have left the firm short.

Investors responded poorly to this unexpected hiccup, prompting a stock tumble of up to 15% in the immediate aftermath. Rivian is now trading down over 18% for the past five days as investors show reservations following the production headwinds. 

CEO RJ Scaringe attempted to allay shareholder fears by claiming that “the battery constraint is really an artifact of just bringing up a highly automated line, and, as I said, it doesn’t present any long-term challenges for us.” Investors will be hoping he’s right and will undoubtedly be keeping an eye on end-of-year vehicle production. 

Should I buy Rivian stock?

Rivian still maintains a lot of positives for any potential investor. The recent announcement of a new production factory in Georgia should help fend off future production woes, and the company’s flagship R1T was recently announced as the 2022 MotorTrend Truck of the Year. Total reservations are up to 71,000 as of December 15th – a 28% rise since November.

Rivian has emerged as a true challenger to Tesla, Ford, and the other players looking to make in-roads in the lucrative EV space. We must remember, it’s an emerging company that went public just over a month ago. There are going to be growing pains, there is going to be volatility, and shareholders are going to be reactionary at times. However, the company has established a very clear niche and seems to be producing vehicles that customers and the industry alike are both very interested in.