Rivian Automotive (RIVN +22%) has surged to its highest levels since July, driven by impressive Q4 production and delivery figures. The electric truck and SUV manufacturer produced 12,727 vehicles and delivered 14,183 in the quarter, concluding FY24 with 49,476 vehicles produced and 51,579 delivered. These results align with Rivian's guidance of 47,000-49,000 vehicles produced and 50,500-52,000 delivered.
- Why the Enthusiastic Market Reaction? The market had anticipated weaker results, estimating Q4 deliveries to be under 14,000 and ending the year at around 50,900. Rivian's actual delivery numbers exceeded these expectations. Production also surpassed estimates, which were pessimistic due to supply shortages mentioned by Rivian in October.
- After a disappointing Q3, Rivian reduced its FY24 production target from 57,000 to 47,000-49,000 due to supply issues from its Gen 2 relaunch. With over half of the parts in new models changed, Rivian relied on different suppliers. Surpassing the high end of its revised guidance by 476 units has positively impacted the stock.
- Rivian announced that a component shortage affecting Enduro motor production is no longer a constraint. The company had focused on resolving this issue since early November, and clearing this hurdle has contributed to the stock's upward movement.
With a major component shortage resolved and Rivian exceeding its lowered FY24 guidance, the market is optimistic about Rivian's potential in 2025. The company is poised for growth through a joint venture with Volkswagen AG (VWAGY, Financial), expecting up to $5.8 billion in proceeds. Combined with its $6.7 billion cash reserve, Rivian has the resources to advance its growth plans, including the launch of the R2 midsize SUV, priced under $50,000, anticipated in 2026.
However, Rivian has faced numerous challenges in the past, leading to potential uncertainty and variability in performance each quarter. Additionally, with the Federal Reserve indicating fewer rate cuts in 2025, financing costs may remain a concern. Rivian's vehicles, often priced over $70,000, typically require consumer financing. Investors may also seek improved profitability, as Rivian projects a modest GAAP gross profit in Q4. Any setbacks in enhancing its bottom line could disappoint investors.
