After a blockbuster initial public offering (IPO) last month, Rivian Automotive (NASDAQ:RIVN) reported its first earnings results as a public company. Notably, the electric vehicle (EV) company reported revenue of $1 million after reporting $0 in Q2. Additionally, the company mentioned that total reservations for its R1T and R1S models increased to 71,000 as of Dec. 15. That’s up 28% from the prior month. So, why exactly are shares of Rivian stock down more than 14% today?
Rivian’s announcement of a decreased 2021 EV production output and mounting losses are the main reasons. Rivian stated that it expects to fall a few hundred units short of its 2021 production target of 1,200 vehicles. This is due to supply chain and battery production issues. However, CEO RJ Scaringe sought to calm investors, stating that the production constraints don’t “present any long-term challenges for us.” The EV company reported a net loss of $1.23 billion, which would equate to an earnings per share (EPS) of -$12.21.
Furthermore, Rivian confirmed that it will be constructing a new $5 billion facility in Georgia. The facility is projected to employ 7,500 employees, which could potentially increase to 10,000. That would make Rivian’s facility the largest industrial factory in Georgia, beating out Kia’s 4,400 employee factory. However, investors will have to wait, as the facility won’t be ready for output until 2024.
Even after reporting revenue of $1 million, Rivian stock still trades at a pricey valuation when you consider the EV maker carries a market capitalization of $79 billion. The revenue came from delivering only 11 of the R1T pickup trucks during Q3. However, two major investment firms reiterated their bullish stance on Rivian after the company reported earnings.
Bank of America and Wedbush Remain Bullish on Rivian Stock
Despite a decreased 2021 EV production output, Bank of America reiterated its buy rating and $170 price target on RIVN stock. The bank noted that the company’s first earnings were “good out of the gate” and that “comparison versus consensus estimates is less robust than our traditional coverage, which may result in some level of scrutiny for the company and possible volatility for the stock.”
Bank of America wasn’t the only firm that viewed Rivian’s earnings report as a positive sign. Wedbush analyst Daniel Ives sees the decrease in EV production as a “supply issue and clearly not a demand issue for Rivian.” Ives goes on to say that the company’s new Georgia factory will help with this issue over the coming years. Furthermore, Ives believes Rivian is in a good position to take market share in the EV industry under Scaringe’s leadership. The analyst maintained his outperform rating and price target of $130.
On the date of publication, Eddie Pan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
