Rivian (Nasdaq: RIVN) fell below its IPO opening price of $106 following its weaker than expected third-quarter results and warning that production issues and supply chain challenges could lead to it coming in "a few hundred vehicles short" of its 1,200 vehicle target.
Rivian is the second-largest American EV company. It went public in early November, and the stock experienced a 90% rally in its first few trading sessions. Since then, the stock has been caught in the broader selloff in growth and speculative stocks leading to a 45% drawdown. Rivian has an $83 billion market cap which means that it has many years of growth and execution to validate this price. Thus, any news that could lower its trajectory or cause the Fed to get more hawkish could expose the stock to a big drop.
Inside the Numbers
In Q3, Rivian reported an operating loss of $775 million and a net loss of $1.23 billion. Both figures were slightly exceeded the company's forecast of an operational loss between $745 million and $795 million and a net loss between $1.21 billion and $1.28 billion.
Most of the negative reaction was the company warning that it was going to miss its production targets in 2020 due to supply chain issues that are affecting all automakers and some issues with ramping up production of its battery technology. However, the company doesn't believe these are longer-term issues.
Despite Rivian being years away from full production, the stock has received support among Wall Street analysts, investors, and high-profile backers including Jeff Bezos. Many see it as the only real threat to Tesla's (NASDAQ: TSLA) EV dominance especially as Rivian is going for a different market with its SUV and pickup truck which have drawn rave reviews from critics.
Total reservations for its R1T pickup and R1S SUV increased to 71,000, a 28% increase from November. This is better than expected. The company confirmed plans for a new $5 billion plant in Georgia that's expected to begin production in 2024.
What's Tesla teaches us is that demand is strong then investors should look past short-term, production issues. However, even Tesla struggled with this task and almost went bankrupt in the process.