Rivian’s profit target may reset after production update

Rivian Automotive (Exactly) fell about 4 percent on Friday after the company cut its full-year production guidance.

The electric pickup maker now expects its annual production guidance to be between 47,000 and 49,000 vehicles, down from the 57,000 units it restated in August.

Related: Analyst updates Tesla stock forecast ahead of key October event

This is due to the lack of components affecting the R1 and RCV platforms. The company said the shortfall began in the third quarter and has worsened recently.

Rivian is maintaining its annual delivery target, expecting modest single-digit growth compared to 2023. It projects to deliver 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 shares are down more than 50% year to date.

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What to expect for Rivian’s Q3 earnings

Rivian is set to release third-quarter financial results on November 7, 2024. In Q2, the company beat Wall Street expectations, reporting a smaller-than-expected loss of $1.13 per share and auto revenue of $1.16 billion USD.

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

The company cut costs. In June, CEO RJ Scaringe said during an investor day event that the company would cut material costs by 20 percent on its current vehicles, followed by 45 percent cuts on its upcoming “R2” vehicles, CNBC reported.

“We are driving very, very quickly to the improvements needed to get to positive free cash flow and before that to positive margins this year,” Scaringe said.

Related: Tesla analysts update views after Q3 deliveries

The analyst maintains the price target on Rivian shares

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

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

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“The company did not mention the target for positive gross margins until the end of the year, but this is now seen as unlikely, assuming the shortfall does not improve in the very near term,” the analyst said in a research note.

Rivian shares, which traded at about $10.44 on Oct. 4, are down more than 50 percent year to date.

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