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Rivian is a 'black eye for the EV industry' but now 'on the right track': Wedbush

·3 min read
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Electric vehicle (EV) startup company Rivian (RIVN) has had a tough year.

Since its high in November 2021, the stock has been on a downward trajectory.

"Let's call it like it is: Rivian has been a train wreck since its IPO and an overall black eye for the EV industry," Wedbush Managing Director of Equity Dan Ives wrote in a new note. "The company has potential to change the EV and auto industry with much hype coming out of the gates, and instead has been a massive disappointment."

In its latest earnings results, the California-based carmaker reported $95 million in revenue, missing consensus estimates compiled by Bloomberg of $131.2 million. The EV maker recorded an adjusted loss per share of $1.43 in Q1, which slightly beat estimates of $1.45.

While the quarter "was not without issues," Ives said, "it does finally appear that Rivian is on the right track with strong demand and a supply chain that should produce 25,000 deliveries this year reaffirming its guidance."

Rivian stated that it still expects to produce 25,000 vehicles this year. The company also noted that it had over 90,000 net R1 preorders from the U.S. and Canada as of May 9. Additionally, the EV maker said that it had received over 10,000 R1 preorders in the US and Canada since it updated its prices in March, with an average price of over $93,000.

'One thing after another'

There's clearly still more work ahead for the EV maker.

Despite largely meeting forecasts, the company detailed persistent problems, including supply chain woes.

“Supply chain continues to be the bottleneck of our production,” Rivian said in its shareholder letter. “We have been forced to stop production for longer periods than anticipated, resulting in approximately a quarter of the planned production time being lost due to supplier constraints.”

Ives was also critical of the company's leadership and said its communication with the Street has been "a case study for what NOT to do."

"Every quarter it's been one thing after another besides the debacle price increase (which was taken back 24 hours later) soap opera," he said.

Ives maintained his Outperform rating, stating he believes Rivian is a "long-term winner" in the space, but lowered his price target from $60 to $30.

An employee works on an assembly line at startup Rivian Automotive's electric vehicle factory in Normal, Illinois, U.S. April 11, 2022. Picture taken April 11, 2022.  REUTERS/Kamil Krzaczynski
An employee works on an assembly line at startup Rivian Automotive's electric vehicle factory in Normal, Illinois, U.S. April 11, 2022. Picture taken April 11, 2022. REUTERS/Kamil Krzaczynski

"To say the Rivian story has been disappointing to us (and the Street) so far would be an understatement," Ives stated. "We believe Rivian from a core engineering and design perspective along with the Amazon commercial relationship has potential to be a major EV stalwart over the next decade. However, for that to happen, they need to start delivering models to customers and stop the excuses."

Ives isn't the only one with a bullish view on Rivian. Investors have their eye on Rivian's future Georgia factory — a $5 billion, 7,500-job commitment —which is set to produce 200,000 vehicles, specially the R2 models, a midsized SUV, by 2025, CEO RJ Scaringe said in the first-quarter earnings call. The manufacturer has $17 billion of cash on hand that will go toward this investment, company executives said.

"We believe this is much better than expected," RBC Capital Markets Analyst Joseph Spak wrote in a note. "The company optimized their product roadmap and opex. [Rivian] has simplified the model lineup simplification (R1 derivatives have been stopped given strong demand behind R1T/R1S), and focusing on R2 by leveraging product learnings from R1 launch."

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

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