Rivian Analyst Cuts Estimates On Demand Concerns, Warns Softer Production, Delivery Trends Jeopardize Growth Stock Multiple

JPMorgan analysts believe Rivian Automotive Inc RIVN may be starting to experience some softness in demand heading into third-quarter earnings.

What To Know: JPMorgan analyst Ryan Brinkman cut the firm’s price target on Rivian to $12 from $14 Tuesday morning after lowering delivery expectations to reflect the latest updates from the EV maker.

Near the beginning of the month, Rivian reported delivery and production numbers for September showing deliveries fell 36% year-over-year to the lowest levels in more than a year and a half. The company also noted it was experiencing some production disruptions due to a shortage of an undisclosed component used across its platforms.

As a result, Rivian lowered its annual production guidance to a range of 47,000 to 49,000 vehicles, down from approximately 57,000.

“Interestingly, 2024 full-year deliveries guidance was reiterated at ~50-52K despite the production shortfall, implying unchanged demand, although we note that the softer deliveries in 3Q do not on the surface appear supply-related,” the JPMorgan analyst said in a note to clients.

See Also: Elon Musk Says Tesla Will Not Buy EV Rival Rivian: ‘Going To Have A Hard Time’

Brinkman wrote that Rivian added 3,139 units to its inventory during the quarter, representing the second-largest quarterly inventory build in company history. Rivian’s average quarterly change in inventory is approximately 950 units. This suggests the EV maker is facing softer demand trends, the analyst said.

JPMorgan lowered its full-year deliveries estimate from 54,000 to 49,000 and cut its price target to $12 based on a blend of discounted cash flow and fundamental-based analysis.

“The softer trend to production (and possibly deliveries also) we think could endanger the company's still growth stock multiple,” Brinkman said.

Rivian will report third-quarter financial results after the market close on Nov. 7. Analysts expect the EV maker to report a loss of 91 cents per share and revenue of $1.044 billion, according to estimates from Benzinga Pro.

RIVN Price Action: Rivian shares were up 0.46% at $10.08 at the time of publication Tuesday, according to Benzinga Pro.

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Photo: Courtesy of Rivian.