Rivian's profit target may reset after production…

Rivian's profit target may reset after production update

Rivian Automotive (RIVN) dropped about 4% on Friday after the company trimmed its full-year production guidance.

The electric pickup maker is now expecting its annual production guidance to be between 47,000 and 49,000 vehicles, down from 57,000 units, which it reaffirmed in August.

This is due to a component shortage affecting the R1 and RCV platforms. The company said the shortage began in the third quarter and has become more acute recently.

Rivian maintains its annual delivery target, expecting a modest growth of low single digits compared to 2023. It projects delivering between 50,500 and 52,000 vehicles for the year.

In the third quarter, Rivian produced 13,157 vehicles and delivered 10,018. So far, in 2024, it has produced 36,749 units and delivered 37,396 units.

Meanwhile, Tesla continues to dominate the market. In the third quarter, Tesla delivered 462,890 vehicles, reflecting a 6% year-over-year increase for the company.

Rivian stock is down more than 50% year-to-date.
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What to expect for Rivian’s Q3 earnings

Rivian is preparing to release its third-quarter financial results on November 7, 2024. In Q2, the company exceeded Wall Street’s expectations, reporting a smaller-than-expected loss of $1.13 per share and automotive revenue of $1.16 billion.

Rivian forecast in August a loss of $2.7 billion in adjusted EBITDA and $1.2 billion in capital expenditures. It also said it was to achieve positive gross margins during the fourth quarter of 2024.

The company has been cutting costs. In June, CEO RJ Scaringe said during an investor day event that the company was to cut material cost by 20% in its current vehicles, followed by 45% reductions in its upcoming “R2” vehicles, CNBC reported.

“We’re very, very fast driving towards the improvements necessary to get to positive free cash flow and, before that, positive margins this year,” Scaringe said.

Analyst maintains Rivian stock price target

Truist on Oct. 4 reaffirmed its hold rating and $16 price target for Rivian after the production cut, thefly.com reported.

The analyst notes that Rivian’s Q3 production and delivery numbers fell 10% and 15% below consensus estimates, respectively, and questions Rivian’s goal of achieving positive gross margins.

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"The company made no mention of the target for positive gross margins by year-end, but this is now seen as unlikely, assuming the shortage doesn't improve in the very near term,” the analyst said in a research note.

Rivian stock, trading at around $10.44 on Oct. 4, is down more than 50% year-to-date.

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