Rivian shares rise on strong fourth-quarter delivery results News ad

Rivian Automotive Today

RIVN

Rivian Automotive

$15.85 +2.60 (+19.62%)

(As of 12:15 pm ET)

52 week range

$8.26

▼

$20.30

Target price

US$15.74

Rivian Automotive Inc. NASDAQ: RIVN The company’s shares rose more than 15% the morning after the company announced fourth-quarter deliveries that were well above analysts’ estimates.

Moreover, the electric vehicle (EV) maker announced that it is no longer experiencing component shortages that limited production of some models.

The company announced total deliveries of 14,183 vehicles for the three months ended December 31, 2024. Here’s some context on these numbers:

• This came in a historically lighter quarter for Rivian’s largest customer. Amazon.com Inc. NASDAQ:AMZN usually reduces supplies.

Rivian first reported the component shortage with third-quarter shipment data in October. The shortage affected parts the company used in its R1 SUVs, R1T pickups and cargo vans.

At the time, the company cut its full-year production target, and RIVN shares, which traded at around $18.11 in July 2024, had nearly halved by early November.

However, with this key production constraint addressed, analysts will now look to Rivian for evidence that it can become a profitable company. Keep in mind that despite beating estimates for vehicles produced in the fourth quarter, Rivian still posted full-year deliveries that were up about 13%. This was reflected in the company’s revenue, which fell sharply compared to last year.

However, the 49,476 vehicles produced exceeded the revised forecast of 47,000 to 49,000 vehicles.

After hitting a 52-week low in November, RIVN shares began to rally following the announcement $5.8 billion joint venture With Volkswagen OTsMKTS: VVAGI. Under the terms of the agreement, Volkswagen will use Rivian’s software in its future electric vehicles. Investors have been enthusiastic about how this additional revenue stream, which is less capital intensive and therefore more profitable, will push the company toward profitability.

However, for the company to achieve sustainable profitability, it will have to demonstrate that it can produce electric vehicles in a cost-effective manner. The company is unlikely to answer this question until it releases new models with lower material costs in 2026.

Meanwhile, analysts will expect Rivian to raise its fiscal 2025 delivery forecast. An analyst at Truist Financial noted, “…the focus will now be on RIVN’s ability to execute on its path to profitability, as we see only modest YoY growth in FY25 ahead of the company’s planned 2026 normal launch of R2.” Truist reiterated a Hold rating on RIVN shares in October and lowered its price target from $16 to $12.

RIVN stock’s 15% rise is impressive, especially because it comes on high trading volume. On the morning of January 3, trading volume in RIVN shares was about 40% above average.

But at a time when all auto stocks are under pressure, should you be chasing stocks higher? If you’re a trader, you’ll notice that RIVN stock still has a high short interest rate of almost 19%. These short positions will be under pressure, which could mean the stock has yet to move a bit higher.

However, if you are thinking about going long, some caution may be necessary. At $15.74 per share, RIVN is now at the resistance level it faced in mid-December 2024. This is also consistent with the current option chain for February 2025.

With the stock price now slightly above analysts’ consensus price, it may be time to wait for a better entry point. As of midday trading on January 3, analysts had not responded to the company’s news.

This could happen when Rivian reports earnings in February. At this point, analysts will be looking for confirmation that the company is indeed approaching profitability.