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Rivian falls 9% after 'Twilight Zone' quarter reveals massive supply chain disruptions and reduced 2022 production guidance

·2 min read
The 2022 Rivian R1T.
The 2022 Rivian R1T.Rivian
  • Rivian stock fell 9% on Friday after the electric vehicle manufacturer said it expects to deliver only 25,000 vehicles in 2022.

  • Rivian has capacity to produce 50,000 vehicles, but supply chain constraints are limiting the company.

  • "Since its IPO in late 2021 the Rivian story has been a bad episode out of the Twilight Zone," Wedbush said.

Rivian stock plunged 9% to a new record low on Friday after the electric vehicle manufacturer released fourth-quarter earnings that missed analyst estimates.

On top of the earnings miss, the company guided for only 25,000 vehicle deliveries in 2022, despite it having the capacity to build upwards of 50,000 vehicles. That's because the company is suffering from supply chain disruptions that have been exacerbated in recent months.

"Our senior leadership team is spending a lot of time with our semiconductor suppliers, and making sure we're securing the right allocation. And that allocation, as we start to get into higher production rates, especially in the back half of this year, is where we see risk," Rivian CEO RJ Scaringe said in the company's earnings call.

Soaring nickel prices don't help Rivian either, as the metal is a key ingredient for electric vehicle batteries. A short-squeeze sparked by Russia's invasion of Ukraine sent nickel prices soaring upwards of 250% to more than $100,000 per ton.

Scaringe said while he hopes the surge in nickel prices are temporary, the company is developing different battery solutions that are less dependent on nickel to hedge against the higher prices.

Wall Street wasn't impressed with Rivian's fourth-quarter results. Wedbush analyst Dan Ives lowered his price target on the company to $60 from $130 in a Friday note.

"Since its IPO in late 2021 the Rivian story has been a bad episode out of the Twilight Zone," he said, adding that its recent price increase blunder only agitates the situation. But Ives is still looking at Rivian with a "glass half full" view given its commercial relationship with Amazon and its core engineering and design perspective.

But Rivian is on thin ice. "One more major PR blunder or meaningful delivery push out for Rivian reservation customers could end the growth story before it began," he said.

Read the original article on Business Insider