Rivian (RIVN) is losing its momentum after the electric vehicle carmaker halved its production forecast due to ongoing supply chain challenges.
When reporting Q4 2021 earnings, Rivian beat on adjusted EBITDA but missed on both total revenues and total number of vehicles produced. The company said it expects to produce 25,000 electric trucks and SUVs this year. Analysts were hoping for the automaker to ramp-up production to 40,000.
"Since its IPO in late 2021 the Rivian story has been a bad episode out of the Twilight Zone for the Street," Wedbush Managing Director of Equity Research Dan Ives, wrote in a note. "The company missed their first quarter out of the box on supply chain issues 'surprises,' then instituted a 20% price unit increase due to inflationary pressures which was then taken back 48 hours later by management after a slew of customer cancellations, and last night added to the pain with very soft unit guidance for 2022."
Ives later added (in bold): "To say the Rivian story has been disappointing to us (and the Street) so far would be an understatement."
During a call with analysts, Rivian CEO RJ Scaringe attributed much of the production issues to the global supply chain crisis, saying that it would play a role in whether or not the company would be able to better increase production in 2022.
"Ultimately, our ability to ramp this year will continue to be gated by the supplier ramps," he said. "And as you know, it's not all the bill of materials. It's just a small fraction of the bill of materials where we're having some of these supplier constraints."
Ives, though, said that company's excuses need to stop if it ever wants to succeed. While he cut his price target from $130 to $60, he still maintained his "outperform" rating for the automaker.
"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," he said. "However, for that to happen they need to start delivery models to customers and stop the excuses. At this point, we are taking a glass half full approach expecting the company to fix this nightmare situation and emerge a stronger company into the second half of 2022 and 2023 and fulfill its potential with the valuation stabilizing as the company hits its key targets."
That said, Ives added, "one more major PR blunder or meaningful delivery push out for Rivian reservation customers could end the growth story before it began, time is ticking for Rivian to show customers, partners, and the Street its potential with much pressure now on RJ & team to finally produce and execute the big vision."
Some see a bright picture: Deutsche Bank's Emmanuel Rosner highlighted Rivian's net reservations, which grew to 83,000 (as of March 8), up from 71,000 in mid-December, signaling new customer traction even after the price increase.
"All in, we believe the stock could remain under pressure over the next couple of months amid high material inflation dynamics, pending some evidence of operational traction with production, and ahead of early shareholders lockup expiration date of May 8," Rosner noted to clients on Friday.
Rosner left his mid-term estimates mostly unchanged and still remains optimistic that the company has the potential to "become a large EV player" if they can execute a "well though-out" business plan.
Over at Bank of America, auto analysts John Murphy shared the same positive sentiment and maintained his "buy" rating.
"The company is one of the most viable among the start-up EV automakers and also a relative competitive threat to incumbent automakers (and possibly to other automotive-related verticals)," Murphy said. "This is due primarily to RIVN's comprehensive and well-defined business model, direct-to-customer sales and service strategy to own customers and capture revenue throughout the vehicle life-cycle, interesting/attractive product, relatively competitive technology, and intangible value in the Rivian brand."
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv