Rivian's stock sinks as parts supply shortage leads to big deliveries miss

By Tomi Kilgore

The stock's selloff has reduced the value of Amazon's investment in Rivian by more than $2 billion in 2024

Shares of Rivian Automotive Inc. were jolted Friday trading, after the electric vehicle maker missed quarterly deliveries expectations by a wide margin as due to a supply shortage, which prompted a cut to full-year production guidance.

The company said production was being disrupted due to a shortage of a shared component on the R1 and RCV model platforms.

"This supply shortage impact began in Q3 of this year, has become more acute in recent weeks and continues," the company said in a statement.

The stock (RIVN) dropped 7.5% in morning trading, which puts it on track for the lowest close since May 23.

For the third quarter to Sept. 30, the company said it delivered 10,018 vehicles, down 35.6% from a year ago, and below the FactSet consensus of 13,000.

Production fell 19.3% to 13,157 vehicles.

For the full year 2024, the company now expects to produce between 47,000 and 49,000 vehicles, down from previous guidance of 57,000 EVs.

Meanwhile, the company affirmed its outlook for delivery growth in the low-single digit percentage range.

CFRA analyst Garrett Nelson followed the news by reiterating his sell rating on the stock but by slashing his price target to $5 from $8. The new target implies about 50% downside from current levels.

"We have been skeptical of [Rivian's] ability to achieve its 2024 guidance from the start and think the announcement is likely to raise red flags among investors," Nelson wrote in a note to clients.

Amazon has lost billions on its Rivian bet

Speaking of investors, Amazon.com Inc. (AMZN) is the Rivian's largest shareholder. The latest disclosures show that as of June 30, the e-commerce and cloud giant owned 158.36 million, or 15.7% of the EV maker's shares outstanding.

That ownership stake hasn't changed since Rivian went public in November 2021. And it's been a bumpy ride for Amazon, to say the least.

Amazon booked an $11.8 billion gain on its Rivian investment for 2021, but then took a $12.7 billion loss for 2022. With a gain of $797 million in 2023, Amazon was just under breakeven as of Dec. 31, 2023.

Since then, the stock has plunged 57.5%, which puts the year-to-date drop in the value of Amazon's investment at about $2.1 billion.

At current prices, Amazon's stake in Rivian is valued at $1.58 billion.

-Tomi Kilgore

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10-04-24 1031ET

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