Rivian’s Missteps Shake Investor Confidence

by Warren Seah

Wedbush analyst Dan Ives expressed his concern over Rivian Automotive Inc.’s recent missteps. Despite strong production and delivery numbers, the company’s announcement of a $1.5 billion convertible debt offering was seen as “another gut punch to investors.” Ives highlighted the low confidence in Rivian’s management team and their struggles with investor messaging and execution. These issues have become a significant problem for the company’s stock, creating a substantial overhang.

Although Wedbush maintains an outperform rating on Rivian’s stock, the firm has reduced its 12-month price target from $32 to $25. Wedbush acknowledges Rivian’s potential for growth in the electric vehicle industry and views it as a long-term winner. However, the recent strategic and investment decisions have raised concerns and eroded Wedbush’s confidence in Rivian’s story.

Investors are growing impatient as Rivian enters its next stage of growth and production expansion. Surprises such as the convertible debt offering only add to their headaches. While Wedbush remains optimistic about Rivian’s future, the company will need to address its investor messaging and improve execution to regain the market’s trust.

Read also: Rivian stock pays the price as timing of debt offering rattles investors — as does EV maker’s cash burn

Rivian Stock Declines After Bond Deal Pricing

Rivian’s stock experienced a 2.2% decrease in the premarket, following a record selloff the previous day after the bond deal pricing. This decline marks the largest one-day drop since the company went public in November 2021, with a 23% fall on Thursday.

In addition to this setback, Rivian provided a preliminary sales estimate for the third quarter, ranging between $1.29 billion and $1.33 billion. Although analysts anticipated sales of $1.31 billion, the company reported more than double the number of vehicle deliveries compared to the previous year, reaching over 15,000 vehicles.

Despite maintaining an outperform rating and remaining optimistic about Rivian’s prospects, experts have expressed concerns about the convert offering and its potential implications. Ives, one such analyst, commented on the need for Rivian to prove itself during this critical period. As a result, the price target was adjusted to $25, reflecting a lower multiple due to an elevated risk profile.

Year to date, Rivian’s stock has increased by 2.7%, while the S&P 500 has shown a gain of 12%.

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