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Rivian Stock Is Dropping. Why Analysts Aren’t Nervous.

Courtesy Rivian

Shares of electric truck startup Rivian Automotive fell Friday following the company’s first quarterly earnings report as a newly public company. Investors are nervous about Rivian’s production ramp-up. Analysts are not.

Rivian (ticker: RIVN) stock was down about 9.5% in premarket trading, falling below $100 at about $98.50. The lowest close since the company’s initial public offering of stock in early November is $100.73. S&P 500 and Dow Jones Industrial Average futures were down 0.3% and 0.1%, respectively.

Rivian plans to manufacture “a few hundred less” electric truck’s than management’s initial target of about 1,200 in2021, implying about 300 or so made in the final two weeks of the year. Through Dec. 15, Rivian had made about 650 trucks. Investors wanted a little more. Still, it’s early in the company’s history and Wall Street doesn’t appear worried.

Wedbush analyst Dan Ives acknowledged that the delivery targets were below expectations.

“The ability to ramp the factory in Illinois, coupled with component shortages [are] the culprit[s] for the shortfall,” wrote Ives in a report Friday. Still, he called demand robust and expects reservations for passenger trucks to exceed 100,000 by the second half of 2022.

Rivian has about 71,000 reservations now, up from about 48,000 at the end of September. “The Street will be disappointed to see a delivery shortfall, however this is a supply issue and clearly not a demand issue for Rivian,” added Ives.

He maintained his Buy rating and $130 price target for shares in his post-earnings report. RBC analyst Joseph Spak also maintained his rating and price target post-earnings. He rates shares Buy. His price target is $165 a share.

Spak’s view of the quarter mirrored Ives. “Demand strong with orders accelerating but production hitting some early bumps,” wrote the analyst in a Thursday evening report. “We don’t believe this impacts the medium-term investment case, but it does highlight that [the company] has a lot on its plate.” Despite any challenges he remains positive and recommended buying the dip in his report.

Coming production is another positive that some analysts were focusing on. “Georgia on Rivian’s mind,” wrote Baird analyst George Gianarikas in a report Thursday evening.

Rivian confirmed its second manufacturing plant will be in Georgia. Construction is slated to begin next year. Vehicles should be rolling off the assembly line in early 2024. Annual capacity is targeted at 400,000 units.

Gianarikas rates shares Buy. His price target is $150 a share.

Those three are all Buy-rated. J.P. Morgan analyst Ryan Brinkman rates shares Hold. His price target is $104 a share. He is a little more bearish, but didn’t appear to be worried about the quarter in his post-earnings report.

“3Q tracked largely in line with our model,” wrote Brinkman. He expected only about 1,000 vehicle to be built in 2021 so falling short of the original 1,200 bogey didn’t surprise him.

Overall, Rivian remains popular on Wall Street with 10 out of 14, or 71% of analysts covering the company, rating shares at Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 55%.

Write to Al Root at [email protected]

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