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After tumbling to a record low of $11.68 per share in April, shares of Rivian Automotive (RIVN) have more than doubled to an 8-month high in late July. The surge in Rivian’s share price has made being short the stock very unprofitable. Shorting shares of Rivian Automotive is the second largest short position behind Tesla (TSLA) among U.S. electric vehicle makers. Investors will look to quarterly earnings results from Rivian later today to see if the short squeeze can continue.
According to data from S3 Partners LLC, short interest in Rivian Automotive has risen to 13% of the shares available for trading, representing about $2.2 billion worth of stock. The large short position in the stock could provide substantial fuel to any short-covering rally. S3 Partner said. “Rivian shorts are getting more squeezable. Losses are what trigger a squeeze and Rivian shorts have been losing money over the last month.” If Rivian’s earnings results manage to impress the market later today, the short covering can continue.
The biggest focus on Rivian’s earnings report will be the progress the company is making in generating a profit. While the quarterly gross margin for Rivian Automotive is expected to remain negative until the fourth quarter of 2024, any signs of improvement in profitability will go a long way in reducing concerns about the viability of its business. The company has recovered from supply-chain issues and rallied to an 8-month high last month after reporting it built 13,992 vehicles in the three months ended June 30, above the consensus of 12,562.
Rivian Automotive remains one of the largest initial public offerings on U.S. stock exchanges after raising almost $12 billion since it became a public company in late 2021. Even with the recent rally in Rivian, the stock is still 86% below its all-time high posted in November 2021. Rainmaker Securities LLC said, “Rivian shares currently reflect a very positive view of today’s earnings results, and the company has insinuated an improvement in capacity in recent comments.” However, “any deviation from that could tank the stock, which already trades at a very high multiple.”
Some analysts are optimistic that the good news for Rivian Automotive can continue, especially after peer Lucid Group (LCID) today climbed more than +5% when it reaffirmed its production outlook and said it would produce at least 10,000 vehicles this year. SPEAR Invest said, “Short interest is common for battleground stocks, and it can work in your favor if those shorts need to cover. Increasing short interest going into earnings means that expectations are low, creating a favorable set-up” for Rivian Automotive.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
