Rivian Analyst Thinks Stock Reflect Strong Mid-term Risk/Reward Profile But Warns Of This Imminent Risk

Rivian Automotive, Inc. RIVN announced Tuesday, first-quarter production numbers that were in line with the company's expectations.

The Rivian Analyst: RBC Capital Markets analyst Joseph Spak maintained an Outperform rating and $100 price target.

The Rivian Thesis: The stronger-than-expected first-quarter production is a good first step in rebuilding investor confidence, analyst Spak said in a note. The analyst pointed out that the company produced 2,553 vehicles in the first quarter, above RBC's forecast for 2,370 units.

The 2,553 vehicles produced in the quarter implies that over the last 23 days of the quarter, the production rate was 348 vehicles per week, Spak said. This would mean additional improvements are being made, he added.

Deliveries of 1,227 units, however, were below RBC's forecast of 2,100 units, apparently because almost a month of production is in transit, the analyst said. Spak sees this issue persisting for a while, given Rivian is still in its early days.

Related Link: Why Rivian Analysts Are Largely Bullish: 'EV Maker Could Be The One That Can Challenge Tesla'

RBC said it is confident in its 2022 production forecast of 25,500 units. The firm, however, lowered its delivery forecast from 24,900 units to 23,700 units to account for longer in-transit times. Accordingly, the firm also modestly tweaked its 2022 forecasts.

Spak said he is cognizant of the upcoming lock-up expiration, which would be around May 8. This is about 180 days from the company's initial public offering of November 9. This event could see offloading of shares by insiders and early investors, which include Ford Motor Company F and Amazon, Inc. AMZN.

The analyst said he still believes Rivian shares reflect "strong mid-term risk/ reward profile."

Rivian Price Action: Rivian shares were trading down 1.78% at $41.38 on Tuesday morning, according to Benzinga Pro data.

Related Link: As Rivian Pulls Back Towards IPO Price, What Should Traders Do With The Stock?