Rivian Defies Doubters: Delivery Triumph Fuels Stock Surge

Key Points

• Rivian stock is up 15% after announcing higher-than-expected fourth-quarter deliveries and an end to the component shortage it announced in October.
• The announcement along with the company’s joint venture with Volkswagen has analysts optimistic about the company’s path to profitability.
• Investors may want to wait for the company’s earnings before taking a long position.  

Rivian Automotive Inc. NASDAQ: RIVN stock is up more than 15% the morning after the company announced fourth-quarter deliveries that came in well above analysts’ estimates.

Better still, the electric vehicle (EV) manufacturer announced that it is no longer experiencing a component shortage that was limiting production for select models.

The company announced total deliveries of 14,183 vehicles for the three months ending on December 31, 2024. Here’s some context around those numbers:

• The consensus among 15 analysts was for 13,472 vehicle deliveries.

• The number was 42% higher than the prior quarter and the highest delivery number in over a year for the EV maker.

• It came in a quarter that is historically lighter as Rivian’s largest customer, Amazon.com Inc. NASDAQ: AMZN is typically scaling back deliveries.

Rivian first reported the component shortage with its third-quarter delivery numbers in October. The shortage affected parts the company used in its R1 SUV, R1T pickup trucks, and delivery vans.

At that time, the company lowered its annual production target, and RIVN stock, which had been trading at around $18.11 in July 2024, was cut nearly in half by the beginning of November.

However, with this key constraint on production removed, analysts will now be looking for Rivian to prove that it can become a profitable company. Keep in mind that despite beating estimates for vehicles it manufactured in the fourth quarter, Rivian still came in light on full-year deliveries by about 13%. This was reflected in the company’s revenue which came in sharply lower on a year-over-year basis.

That said, the 49,476 vehicles it manufactured were above its revised forecast of between 47,000 and 49,000 vehicles.

A Key Step Towards Profitability

After hitting a 52-week low in November, RIVN stock has been on the rise after it announced a $5.8 billion joint venture with Volkswagen OTCMKTS: VWAGY. Under the terms of the agreement, Volkswagen will use Rivian’s software in its coming EVs. Investors were enthusiastic about how this additional revenue stream, which is less capital intensive and, therefore, more profitable, would push the company towards profitability.

However, for the company to achieve sustained profitability, it will have to show that it can build EVs in a cost-effective manner. The company is not likely to answer that question until it releases its new models with lower material costs in 2026.

In the meantime, analysts will be looking for Rivian to raise its delivery outlook for fiscal year 2025. An analyst from Truist Financial remarked, “...the focus will now be on RIVN’s ability to execute on its path toward profitability as we see only modest YoY growth in FY25 ahead of the company’s planned 2026 R2 launch at Normal.” Truist reiterated its Hold rating on RIVN stock in October and lowered its price target from $16 to $12.

Does the Breakout Have Legs?

A 15% rally in RIVN stock is impressive, particularly since it’s occurring with high trading volume. On the morning of January 3, trading volume in RIVN stock was approximately 40% higher than the average.

But at a time when all automotive stocks are under pressure, should you chase the stock higher? If you’re a trader, you’ll note that RIVN stock continues to carry a high short interest of nearly 19%. Those short positions will be under pressure, which could mean the stock still has a little higher to run. 

However, if you’re thinking about a long position, some caution may be necessary. At $15.74 per share, RIVN is now at a level of resistance it met in mid-December 2024. It’s also consistent with the current options chain for February 2025.

With the stock now slightly above analysts' consensus price target, now may be a time to wait for a better entry point. As of midday trading on January 3, analysts had not responded to the company’s news. 

That could come when Rivian reports earnings in February. At that point, analysts will look for confirmation that the company is indeed moving closer to profitability.