Rivian Stock Is Not a Good EV Play Before Q1 Results

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RIVN stock - Rivian Stock Is Not a Good EV Play Before Q1 Results

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The Electric vehicle industry hasn’t had a good start to 2022 and every time investors think the stocks have hit rock bottom, they dip to another low. Rivian (NASDAQ:RIVN) stock filed the annual 10K in March and mentioned the semiconductor shortage which has forced the company to produce fewer vehicles as compared to what it could have produced if not for the challenges.

The company expects to produce only 25,000 vehicles this year due to which RIVN stock is suffering. The stock is down to $30 today, which is a 21% dip over the past week. It has dropped 70% in the past 6 months and this dip might continue in the short term. I believe the stock is best avoided considering the current situation of the EV market. 

The company is expected to announce its first-quarter results on May 11 and it will set the tone for the current challenges and production estimates of the automaker. It reported a revenue of $54 million in the previous quarter and did not provide a 2022 guidance. 

Brian Johnson, a Barclays analyst has recently reflected on the company before the company announces its first-quarter results. The company produced 2,553 electric vehicles in the first quarter and reported 1,227 deliveries. 

The analyst believes that the deliveries for the quarter lagged expectations but the production rate supports the FY 2022 production target of 25,000 units. Since the company reported 2,553 units in the first quarter and has reported 1,410 units of production year to date until March, the next exit rate could be 410 units a week.

Assuming that the company holds that run rate weekly, it could be 5,350 units of production and if the company improves the second quarter weekly rate by 10%, it could be a higher improvement in the second half of the year as compared to the second quarter. Johnson has slashed the second-quarter delivery estimates to 4,150 from 4,910. He also cut the EPS estimate for the first quarter to -$1.35 and the price target to $38. 

Wait for the results before taking a position in RIVN stock. If you are keen on investing in EV stocks, there are several other players to consider. 

On the date of publication, Vandita Jadeja 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.


Article printed from InvestorPlace Media, https://investorplace.com/2022/04/rivian-stock-is-not-a-good-ev-play-before-q1-results/.

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