Is This Rivian’s Breakthrough Moment?

The good news for electric vehicle maker Rivian (NASDAQ: RIVN) just keeps on coming. It’s been a hot week two weeks for the California-based manufacturer. The company’s stock price has soared by nearly 80 percent since June 27, 2023.

It appears that Rivian is finally turning the corner on its longstanding supply chain challenges.

• The company’s Q2 production and delivery results reported last week beat analyst estimates and tripled output compared to the same period last year.
• Rivian says it’s on track to meet its annual production target of 50,000 vehicles.

Last week, Amazon (NASDAQ: AMZN) announced that the first 300 Rivian Electric Delivery Vans arrived in Germany and will be on the road in the coming weeks.

Why It Matters

Rivian’s association with Amazon is critical to its future expansion and prosperity. 

• Amazon is Rivian’s largest shareholder, with a 17 percent stake. Other major shareholders include Blackrock and Vanguard.

Rivian Is a Big Part of Amazon’s Net-Zero Strategy

• Amazon is committed to reducing its carbon footprint and aims to achieve net-zero carbon emissions by 2040.
• The company plans to buy 100,000 electric delivery trucks from Rivian by 2030 to help it meet its net-zero emissions goals. It already has over 3,000 Rivian-purchased electric delivery vehicles in operation in the United States.

The Backstory

Rivian Automotive Inc. is a U.S. EV technology and manufacturing company founded in 2009. It’s targeted exploration enthusiasts and companies with dominant delivery operations — as evidenced by its partnership with Amazon.

• In addition to Amazon, Rivian is financially supported by other industry big players Cox Automotive and Ford.

Since going public in 2021, the company has been plagued by manufacturing delays. But its management has now effectively improved its supply chain, allowing for increased production and vehicle deliveries.

• The R1S, the company’s electric SUV, and the R1T, its all-electric pickup truck, have both gained traction.

Key Data

• Rivian’s current market capitalization stands at approximately $23 billion.
• The company witnessed a rapid surge in sales revenue from $55 million in 2021 to $1.65 billion in 2022, according to Rivian’s 2022 financial statement.
• As per the average estimates obtained from 21 analysts reported by Yahoo Finance, Rivian’s revenue is projected to reach $4.05 billion in 2023 and $7.73 billion in 2024.
• Rivian — which currently runs a loss of $1.35 billion — holds nearly $11.2 billion in cash and cash equivalents, as per its Q1 2023 financial statements, providing sufficient capital for operations and research and development projects.
• Senior managers and directors hold approximately 12.16 percent of shares, demonstrating management’s confidence in Rivian’s future growth and alignment with the company’s goals.

What the Experts Are Saying

“We believe [that] after a number of ‘one step forward, two steps back’ excuses for Rivian and supply-chain headaches, the company is finally making a major turn towards executing on its longer-term business model … Demand remains firm for the company’s unique EV model lineup while production appears to now be on the road to success as seen with stronger deliveries in [the second quarter].”

Wedbush analyst Dan Ives

What to Watch Out For

Rivian is currently being sued by shareholder Charles Larry Crews, who alleges that the company defrauded its IPO investors by withholding information about underpricing its vehicles, resulting in significant price increases. 

• The lawsuit alleges that Rivian was already aware of higher material costs and the need to raise prices, but failed to disclose this to investors. The case has the potential to harm Rivian’s reputation and adversely impact its stock price.