Rivian (NASDAQ:RIVN) is hitting some bumps in the road. The EV maker’s Q3 delivery and production numbers fell short of expectations, but that wasn’t even the most concerning part of the update.
More importantly, on account of a component shortage issue affecting both R1 and EDV production, the company lowered its annual production guide from 57,000 vehicles to the range between 47-49,000 units.
On the plus side, the company stuck to its deliveries target for the year, calling for LSD% growth at 50,500-52,000 vehicles. However, Deutsche Bank analyst Edison Yu notes that based on commentary from the company indicating the supply shortage has become more of an issue recently and is expected to linger, the production woes could impact 1Q25 deliveries.
Additionally, Rivian has already stated that a halt to production is expected during the second half of next year, with manufacturing paused for over a month as it upgrades and integrates new equipment in preparation for the R2 launch in the first half of 2026.
There are also other implications here that could further sour investor sentiment. Rivian has targeted Q4 as the period when it expects to reach a positive gross margin but now Yu wonders whether that is still achievable. Factoring in the supply chain challenges, the analyst now expects Q4 gross margin will come in below breakeven.
Furthermore, Yu has now reduced his Q3 revenue forecast from $951 million to $867 million, compared to consensus at $1,088 million. Yu has also lowered his 2025 delivery outlook from the prior 62,000 to 56,000 units. “We will look to earnings on Nov 7th for more color on the expected resolution timeline,” Yu summed up.
That all results in a tweak to Yu’s price target, which now stands at $13 (down from $14). Nevertheless, it still suggests shares will climb 24% higher over the coming months. While Yu expects the shares to gain, his rating remains a Hold (i.e., Neutral) for now. (To watch Yu’s track record, click here)
Overall, RIVN shares have a Moderate Buy rating from the analyst consensus, based on 19 reviews. These include 9 Buys and 10 Holds. Shares are priced at $10.42, and the average price target is a bullish one; at $17.63, the figure makes room for 12-month returns of 69%. (See Rivian stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
