*** ONE-TIME USE *** Rivian Manufacturing
Courtesy Rivian
Stock in electric-truck startup Rivian Automotive has been decimated to start 2022. Dazed investors must be wondering what, if anything, can turn the investing tide. They haven’t received any ideas on that subject from Wall Street lately, so something other than analyst research will have to boost Rivian in coming months.
Coming into Friday, Rivian (ticker: RIVN) stock already has dropped 37% this year. The S&P 500 and Dow Jones Industrial Average have fallen about 6% and 4%, respectively.
Rivian has a couple of problems. Fears of rising interest rates are hurting richly valued, more speculative, stocks than others. Companies with no, or limited, current sales, such as Rivian, generate most of their earnings and cash flow far in the future. Those earnings are worth less discounted back to today when interest rates are higher.
No, or low, revenue electric-vehicle-company stocks have dropped about 22% so far in 2022. EV companies with significant sales are down about 8%, on average. Shares of EV leader Tesla (TSLA) have declined about 5% year to date.
Rates explains a lot. Still, Rivian is the worst performing of the no-low sales EV companies. One big reason for the extra weak performance with Rivian shares is production. Back on Jan. 10, Rivian said it had produced 1,015 vehicles in 2021. That was roughly 200 below the company’s goal.
Higher production would go a long way to helping the stock get some of its mojo back. That’s what investors will need to see.
Wall Street analysts appear to be waiting to see rising production at the company too. Analysts haven’t stepped into explain declines or defend the stock recently. The most recent Rivian research reports from Wall Street date back to Jan. 13 and Jan. 14, according to Bloomberg and FactSet.
The stock has dropped almost 20% since Jan. 13. There is no specific reason for analysts to comment on big drops, but the gap in research reports is a little long. Tesla research reports, for comparison, come every couple of days, especially after delivery results and before earnings are reported.
Tesla is reporting earnings next week. Rivian hasn’t scheduled its fourth-quarter earnings report yet. It will likely be held in mid-February.
Despite the silence, almost 70% of analysts covering Rivian stock rate shares Buy. Less than half of analysts covering Tesla stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 58%.
The average analyst price target for Rivian stock is about $134 a share, up more than 100% from recent levels.
When they arrive, earnings at Rivian won’t matter. Investors will only care about the production ramp-up at the company.
Write to Al Root at [email protected]
