Even among speculative growth stocks, Rivian Automotive (NASDAQ:RIVN) stock performed strongly, surging from around $17 to prices nearing $25 per share. It’s given back some of those gains trading around $20 today. Although shifting sentiment about the overall macro picture is playing a role, a much larger factor has been the unveiling of the company’s latest production and delivery numbers.
While big time fans of the stock may beg to differ, for many there is one big takeaway from these figures. The company needs to improve demand alongside overcoming past production hiccups. Until then, shares could keep encountering some rough terrain, as I’ll explain below.
A Closer Look at RIVN Stock
On Jan. 2, Rivian released production and deliveries data for both Q4 and the full year 2023. During the December quarter, the company produced 17,541 vehicles. This brought its production total to 57,232 vehicles, a few thousand units ahead of management production guidance for the year (54,000 vehicles).
Yet while production beat expectations, that wasn’t the case with deliveries. Deliveries of 13,972 vehicles fell slightly short of sell-side forecasts (14,111 vehicle deliveries). This also represented a sequential (quarter-over-quarter) deliveries decline. For the full year, Rivian delivered 50,122 vehicles, a more-than 7,000 vehicle shortfall compared to the aforementioned production figure.
Again, those very bullish are RIVN stock are quick to explain this production/deliveries discrepancy. Per die-hard Rivian fans, Amazon (NASDAQ:AMZN) did not take delivery of any electric delivery vans (or EDVs) produced for the e-commerce giant as part of its 100,000 EDV purchase order.
However, while this counter may explain away much of last quarter’s shortfall, it cannot account for the full-year’s shortfall. Whether because of high vehicle prices, or because of the slowdown in consumer adoption of EVs, demand challenges remain.
Why Shares Could Stay on Low Charge (or Worse)
The recent resurgence in uncertainty notwithstanding, the macro backdrop could continue to become more favorable for names like RIVN stock. In the coming months, further signs of a “pivot” by the Federal Reserve may emerge. Later this year, we could finally see the Fed begin to cut interest rates.
This, in conjunction with a cooldown in inflation, may do wonders to re-accelerate growth for the American EV industry at-large. However, whether macro improvements will fully fix the demand issue at Rivian is another question.
Until Rivian is better-positioned to compete on price (a few years down the road, when it produces lower-priced models like the R2 midsize SUV), challenges finding demand for its premium models (the R1S SUV and R1T pickup truck) could continue. Assuming this company-specific negative outweighs the macro positives, this could affect RIVN’s performance in one of two ways.
Best-case scenario, Rivian stock treads water throughout this year, and into next year, until further news regarding the R2, or further news regarding demand growth for its EDVs, arrives. Worst-case scenario, the RIVN sell-off carries on in the months ahead, especially after next month’s quarterly earnings release and updates to guidance.
Bottom Line
With Q4 delivery numbers already known, I wouldn’t expect too many surprises when Rivian reveals its latest quarterly revenue and earnings results post-market on Feb. 21, except for perhaps the reporting of narrowing losses (as what happened last quarter).
Still, some troubling news could be revealed in the guidance update. Rivian may walk back deliveries forecasts for 2024. After last year’s production beat-and-raises, subsequent production growth updates could fall short of expectations.
Further details about Rivian’s expected cash burn/cash runway may also elicit a negative response from the market, resulting in yet another moderate sell-off for shares.
With all of this in mind, once again, expect it to stay a bumpy ride for RIVN stock. If you’ve been looking to buy, consider there to be little rush to jump into a position. Reversing course after last month’s run-up, a more opportune entry point may take shape down the road.
On the date of publication, Thomas Niel did not hold (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.
