Rivian Automotive (RIVN) stock experienced a significant surge of 17.4% on Monday, reaching a more than four-month high. This boost came as the company announced strong delivery numbers for the second quarter, overshadowing Tesla’s own Q2 delivery release. Rivian’s stock rally was enough to outshine Tesla’s own gains, with Elon Musk’s company seeing a 7% increase on Monday due to a 4.8% beat on the consensus for second-quarter deliveries. This positive performance had a ripple effect across the electric vehicle sector, with other companies such as Lucid, Fisker, Li Auto, and Nio also rallying strongly.
Rivian CEO RJ Scaringe had initially set a goal of 50,000 deliveries for 2023. However, this target seemed uncertain after the automaker only delivered 7,946 vehicles in the first quarter. The situation changed significantly on Monday when Rivian announced second-quarter deliveries of 12,640, representing a remarkable 59% growth rate in just one quarter. Production also increased substantially from 9,395 vehicles in Q1 to 13,992 vehicles in Q2, a significant 49% quarter-over-quarter (QoQ) increase. This jump in production demonstrates that Rivian is making progress in meeting its operational targets and overcoming the challenges associated with ramping up production.
With a total of 20,586 deliveries in the first half of the year, Rivian now needs just over a 10% QoQ growth in deliveries during the third and fourth quarters to achieve its goal of 50,000 deliveries for the year. Given the impressive 59% ramp-up in deliveries during the second quarter, the chance of Rivian surpassing the 50,000 figure has become quite likely.
However, the impact of the increased production level on Rivian’s margins remains uncertain until the company releases its Q2 earnings results on August 8. The current consensus among analysts is a GAAP loss of $-1.53 on revenue of $957 million. However, this consensus is expected to improve as analysts return from the July 4 holiday. Recent analyst notes from Truist Securities and Canaccord Genuity have both reiterated Buy ratings for RIVN, with price targets of $28 and $40, respectively.
Despite the positive momentum, it is essential for RIVN stock to break the $22 level for a long-term uptrend to form. The $21 to $22 resistance window has proven challenging in the past, preventing the stock from reaching higher levels earlier this year. The last time Rivian’s stock closed above $22 was on December 19 of last year. Breaking through this barrier is crucial to unleash a sustained upward trend in the second half of the year. Further resistance levels at $25, $31, and $40 should also be considered, as breaching these levels could result in gains of between 25% and 100% from the current price.
On the other hand, investors should be cautious as the Relative Strength Index (RSI) currently indicates an overbought reading of 75. It could be wise to look for long-term support levels around the mid-$15s and $12. Implementing stop-loss orders is crucial to manage risk. Failure to break and close above $22 may lead to profit-taking by traders.
In summary, Rivian’s stock experienced a significant spike on Monday following strong second-quarter delivery numbers. The company’s performance outshined Tesla’s gains and had a positive impact on the electric vehicle sector as a whole. With increased production and promising delivery figures, Rivian has a good chance of surpassing its 50,000-unit delivery target for the year. However, the stock’s long-term uptrend will depend on breaking through the $22 resistance level. Investors should be aware of the overbought RSI reading and consider implementing stop-loss orders to manage risk effectively.
