- Summary:
- Despite Rivian stock price gaining over 25% in the last five session, the company potentially sits on quicksand and in a race against time.
Rivian stock price extended its upsurge on Tuesday as investors bought into news of a conditional $6.6 billion loan infusion by the Department of Energy. Rivian (NASDAQ: RIVN) closed the day’s session up by 5.8 percent, bringing its gains in the last five sessions to 25%. However, a deeper understanding of the company’s fundamentals show that the latest investment is a respite, not a solution to its struggles.
For a company whose primary business is the manufacture and sale of electric vehicles (EVs), Rivian has performed poorly. In 2023, for instance, it managed to deliver less than 20,000 vehicles against a target of 50,000 vehicles. Worse still, its margins have worsened in recent times. As per its Q3 report, Rivian’s loss per vehivle stooot at $39,130, worse than Q2’s figure of $32,700.
President-elect Donald Trump’s plans to scrap a $7,500 tax rebate on EVs could compound the company’s problem. However, California Governor, Gavin Newsom, announced on Monday that he would propose the estblishment of a state equivalent of the rebate program. That could help alleviate the impact of Trump’s new policy, considering that California has the largest number of EV buyers in the US.
Nonetheless, Rivian will have to be more aggressive in its sales growth strategy. The company has revealed that if approved, the $6.5 billion government loan will go toward building a mega factory in Georgia. With a production capacity of 400,000 vehicle per annum, the plant would certainly.
However, the plant isn’t expected to be fully operational until 2028. Therefore, the company is likely to continue struggling with margins in the intervening period. Furthermore, in October, Rivian lowered its production guidance for 2024 from 57,000 to between 47,000 and 49,000. These factors could exert pressure on Rivian stock price in the coming weeks.
Rivian stock price prediction
Pivot: Rivian stock price currently pivots at $12.05, and the RSI indicators shows the buyers in control.
Resistance: The immediate hurdle is likely to be at $12.30. However, extended control by the bulls could clear that level and test $12.55.
Support: The first support is likely to be at $11.75. A break below that level will invalidate the upside thesis. Also, a stronger downward momentum could take the price lower to test $11.55.
