Why Rivian Stock Is Rising Today

what happened

Rivian Automotive (RIVN -5.14% stock surged Thursday and was trading up 3.3% as of 1:45 pm ET after rallying as high as 5.5% in early morning trade.

This may be attributed in part to an article published Thursday in which Chief Financial Officer Claire McDonough revealed the number of electric delivery vans Rivian plans to deliver to Amazon.com (AMZN 0.69% this year.

so what

Also on Thursday morning, Mizuho analyst Vijay Rakesh reiterated his buy rating on Rivian shares, although he trimmed his price target to $95 a share. That still represents nearly 107% upside from the electric vehicle (EV) stock’s Wednesday closing price.

Earlier in the month, Rakesh lowered his price target on Rivian to $100 a share from $145 per share after the EV maker reported disappointing fourth-quarter numbers and projected that it would only deliver 25,000 vehicles in 2022 — well below both analysts’ consensus estimates of around 40,000 units and the company’s own prior forecast of 50,000 units in the absence of supply constraints.

The analyst stated that while Rivian’s business model and product portfolio are compelling, the key to its growth will be “ramping production and avoiding costly delays,” according to TheFly.com.

On March 10, Rivian said it expects to build 25,000 vehicles in total this year in between its three models: the R1T pickup truck, the R1S SUV, and its electric delivery van. While its R1T pickup truck has attracted a lot of attention in recent months, it is Amazon’s order for 100,000 electric delivery vans to be delivered between now and 2030 that investors have been betting on.

Rivian R1T electric pickup truck.

Image source: Rivian.

In a Bloomberg article published Thursday, McDonough said Rivian plans to deliver 10,000 delivery vans to Amazon in 2022. McDonough further stated that the company is pretty much in control of the rate at which it’s deploying capital, and can pick and choose its moment in terms or when to raise more money if that’s necessary.

now what

The CFO will have a lot to prove if she’s going to revive investor confidence in Rivian. It doesn’t help that her team was behind the price increases that the company announced earlier this month, and which it tried to impose even on those consumers who had already pre-ordered vehicles at lower prices. Rivian fairly quickly rolled back the decision to boost the prices for vehicles ordered before March 1, but the move angered customers, with some even canceling their pre-orders.

Now, McDonough says that the stock price “will take care of itself” if the company can prove its ability to launch new vehicles and scale up production in a cost-effective way. The latter is a big “if” for now though, and something investors in Rivian may want to keep in mind.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.

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