Key points:
- RIVN stock has dropped nearly 20% this month, as investors grow worried about looming problems
- CEO RJ Scaringe warns of severe shortages dwarfing the semiconductor crisis
- Mizuho analyst Vijay Rakesh lowered its price target to $90 from $95
Now, as mentioned a lot recently, is a problematic time for EV companies. From new companies still finding their feet to more established market share rulers, headwinds are affecting growth in numerous different ways, transforming EV ‘revolutionary’ sentiment into something slightly more daunting. Positivity didn’t seem to last for too long before supply chain headwinds and semiconductor shortages meant that companies are struggling to meet surging consumer demand.
It’s difficult establishing firm roots as a new company anyway, without the fact that looming shortages have become an ever present feature of the EV landscape. For Rivian (NASDAQ: RIVN), this was the problem that CEO RJ Scaringe pointed to recently; warning consumers of an impending battery shortage that could be even worse than the semiconductor shortage that plagued sales previously.
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Scaringe’s foreboding warning hasn’t exactly helped the already struggling EV stocks, and RIVN sunk by a further 4.5% today. With shortages expected in all aspects of manufacturing; from raw materials, processing, and building the battery cells; it won’t just be Rivian under long-term pressure. The future of EV production may be about to take a turn for the worst. Due to the rapid increase in demand expected over the next 10 years, Rivian CEO claims the world's cell production is well under 10% of what is needed to meet the rise.
Moving towards the company’s earnings in May, Mizuho analyst Vijay Rakesh lowered the firm's price target on Rivian to $90 from $95 and holds a Buy rating. Rakesh believes the company is well positioned but states simply that the company is “growing through a grueling learning phase reflective of EV startups”. Whilst this may be true, the grueling phase that Rakesh refers to is more of a commonality surrounding the entire EV manufacturing sector, rather than specifically Rivian.
With RIVN stock dropping nearly 20% over the last month, investors need to cancel out near-term noise in favor of Rivian’s positioning in the overall sector.