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Rivian (RIVN) Stock Sells Off Despite On-Track Production, Here’s Why

Ollie Martin - AskTraders News writer
Ollie Martin trader
Updated 6 Apr 2022

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Key points:

  • Rivian re-affirms FY22 production guidance following on-track Q1 production
  • RIVN stock continues to show strong selling pressure as investors still aren't convinced
  • The company should be able to hit the slashed target of 25,000 by the end of FY22

Rivian is one of the multitudes of EV companies that still has a lot to prove. Sure, backing by Ford and Amazon seems prestigious, but to what avail? Investors don’t seem all that interested in the EV truck maker; pressuring a downward trend that constantly seeks out new all-time lows.

In all fairness, the economic landscape hasn’t exactly been ideal for vehicle manufacturers, and chiefly for those who are still chipping away at the tough walls of consumer sentiment. Various companies have had to cut back expected deliveries in the midst of supply disruptions; Rivian was one of these, lowering its FY22 production guidance by almost half.

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It shouldn’t be all doom and gloom over at Rivian. The company announced yesterday that production is on track to deliver on the new goal of 25,000 EVs, producing 2,553 in Q122. So why are investors still not satisfied? RIVN shares dropped by nearly 10% yesterday despite the positive news, as it seems the market expects more from the company. Perhaps Rivian hitting its sliced target isn’t all that impressive, analysts and investors are looking for a strong financial outlook, but that might be difficult when supply chain constraints act as a limiter to impressive levels of production. 

As pointed out by CEO RJ Scaringe:

“The biggest constraints we now face really lie with the supply chain…It’s really a small number of parts for which the supplier isn’t ramping at the same rate as our production lines are ramping up. Were it not for supplier constraints…we’re confident we could achieve in excess of 50,000 vehicles this year.”

Unfortunately, there is a strong emphasis on the ‘could’. While Q1 results suggest Rivian is starting to navigate some production bottlenecks, uncertainty still plagues the company moving forward. If Rivian were to raise its production outlook should operations turn a corner, this might be reflected in the share price. 

Ollie Martin - AskTraders News writer
Oliver is a financial writer and analyst specialising in the US stock market, with years of personal experience in understanding micro/macroeconomic structures, market trends and fundamental analysis.