Production at Rivian Automotive grew in the first quarter from the fourth, but the stock was falling Wednesday.
Rivian (ticker: RIVN) reported first-quarter production on Tuesday of 2,553 electric trucks, up from 1,015 vehicles produced in the fourth quarter of 2021.
The results were in-line with Wall Street expectations and the stock was rising in premarket trading Wednesday, by about 3%. But shares have given up the gains on another tough day for markets. Rivian stock fell 4.4% on Wednesday. The S&P 500 and Dow Jones Industrial Average were off about 1.3% and 0.7%, respectively.
The Wednesday move adds to Tuesday’s 9.3% loss in Rivian shares. Tuesday was a tough day for all growth stocks. The Nasdaq Composite Index dropped 2.3% after Federal Reserve Gov. Lael Brainard made hawkish comments in a speech.
The drop on Tuesday added to a tough run for Rivian stock. Coming into Wednesday trading, shares have fallen almost 60% year to date and are down more than 75% from their 52-week high of almost $180 a share.
The Fed’s battle with inflation is part of the reason for declines. Higher interest rates, used to battle inflation, tend to hurt growth stocks more than others. But Rivian has had its own struggles too.
Coming into the year, Wall Street expected Rivian to produce about 40,000 vehicles in 2022. Rivian guided to about 25,000 vehicles in its fourth-quarter earnings release in March.
The Tuesday update is the latest Rivian news related to the guidance. Production will have to ramp up in the remainder of the year to meet guidance, but that isn’t a surprise and Rivian said it was on track to meet it full-year 2022 guidance.
RBC analyst Joseph Spak called the result a “good first step” in a report, adding that solid production can help rebuild confidence in the EV maker. Spak rates Rivian shares a Buy. His price target is $100 a share.
What investors need in coming quarters is a positive surprise about production rates. That could get the stock moving higher again.
Most of Wall Street, like Spak, is still supporting the stock, despite the slow production ramp. Almost 70% of analysts covering the company rate shares a Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 58%. (The Buy-rating ratio for EV peer Tesla (TSLA) stock is less than 50%).
The average analyst price target for Rivian stock is about $79 a share, up more than 80% from recent levels.
Write to Al Root at [email protected]
