Rivian Stock Is Falling and Wall Street Isn’t Helping

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Stock in electric-truck startup

Rivian Automotive

has been decimated to start 2022. Dazed investors must be wondering what, if anything, can turn the investing tide. They haven’t received any ideas on that subject from Wall Street lately, so something other than analyst research will have to boost Rivian in coming months.

Through Friday trading, Rivian (ticker: RIVN) stock has dropped 38% this year. The

S&P 500
and

Dow Jones Industrial Average
have fallen about 8% and 6%, respectively.

Rivian has a couple of problems. Fears of rising interest rates are hurting richly valued, mspeculative, stocks more than others. Companies with no, or limited, current sales, such as Rivian, will generate most of their earnings and cash flow far in the future. Those earnings are worth less discounted back to today when interest rates are higher.

Stocks of EV companies with no, or little , revenue have dropped about 27% so far in 2022. Those with significant sales are down about 14%, on average. And shares of the EV leader,

Tesla

(TSLA), have declined about 11% year to date.

Rates explains a lot. Still, Rivian is the worst performing of the no-to-low sales EV companies. One big reason for the extra weak performance with Rivian shares is production. Back on Jan. 10, Rivian said it had produced 1,015 vehicles in 2021. That was roughly 200 below the company’s goal.

Higher production would go a long way to helping the stock get some of its mojo back. That’s what investors will need to see.

Wall Street analysts appear to be waiting to see rising production at the company too. Analysts haven’t stepped into explain declines or defend the stock recently. The most recent Rivian research reports from Wall Street date back to Jan. 13 and Jan. 14, according to Bloomberg and FactSet.

The stock has dropped almost 20% since Jan. 13. There is no specific reason for analysts to comment on big drops, but the gap in research reports is a little long. Tesla research reports, for comparison, come every couple of days, especially after delivery results and before earnings are reported.

When they arrive, earnings at Rivian won’t matter. Investors will only care about the production ramp-up at the company.

Tesla is reporting earnings next week. Rivian hasn’t scheduled its fourth-quarter earnings report yet. It will likely come in mid-February, though investors aren’t likely to focus on the numbers. They will only care about the production ramp-up at the company.

Despite the silence, almost 70% of analysts covering Rivian stock rate shares Buy. Less than half of analysts covering Tesla stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 58%.

The average analyst price target for Rivian stock is about $134 a share, up more than 100% from recent levels.

Write to Al Root at [email protected]