Rivian's Financial Standing Raises Concerns Amid Successful Delivery to Amazon

Fundamental Analysis

Rivian Automotive, Inc. (RIVN) is a NASDAQ-listed company primarily engaged in the manufacturing of electric vehicles (EVs). With a market capitalization of $18.22 billion, it emerged as a strong contender in the EV market with a massive delivery of 300 all-electric, zero-emission commercial vehicles to Amazon in Germany in July 2023.

Impressively, despite competition from established players like BYD, Tesla, and NIO, Rivian managed to secure and fulfill this significant order, marking its first commercial delivery outside the United States.

However, Rivian's earnings per share (EPS) at -$7.08 and a price-to-earnings (PE) ratio at -2.76 cast some concern over its financial health and profitability. With other EV makers, such as BYD, managing to achieve impressive sales figures, the question of Rivian's financial sustainability comes into sharper focus.

Taking into account Rivian's recent business developments and discounting its future cash flows, financial analysts have set a wide target range for the stock, with a low target of $14, a median target of $31.5, a high target of $147, and a consensus target of $54.72.

Technical Analysis

On the technical front, Rivian's stock has shown significant movement. Its last close price on July 3, 2023, was $19.56, which marked a change of $2.90 or an impressive 17.41% rise. The stock recorded a low and high price of $17.81 and $19.70 respectively on that day. However, compared to its year-high and year-low of $40.86 and $11.68, Rivian is currently trading well below its peak price while it stays well above its lowest price.

Rivian's Relative Strength Index (RSI) stands at 74, suggesting that the stock is overbought in the current market. It's currently trading considerably above its 50-day moving average of $13.90 but is below its 200-day moving average of $21.15. Furthermore, it has a slight positive 3-month Moving Average Convergence Divergence (MACD) of 0.15.

Lastly, the trading volume of Rivian's shares was 79.98 million, far exceeding its average volume of 26.53 million, signalling robust trading activity on that day.

Stock Price Prediction

Given the momentum of the stock and the promising business development, the stock price could potentially rise in the next trading day on July 5, 2023. For the upcoming week, although the stock may experience some pullback due to its high RSI, the overall trend could remain positive due to the buzz around the successful delivery to Amazon.

Evaluation

Though Rivian's landmark achievement with Amazon in Europe should not be underestimated, its weak financial standing with a negative EPS and PE ratio raise concerns about its profitability. Thus, the stock should be considered as a 'Hold' for those who already own it, as there are signs of further business growth.

However, at the current price levels, it might be risky for new investors to 'Buy', considering its overbought level. Perhaps awaiting further confirmation of improvements in financial performance or a pullback in price levels could be a more prudent strategy. Conversely, 'Sell' could be an option for those investors who want to lock in recent gains and are cautious about Rivian's financial standing.

It is important to cluster all these cues together and consider them as part of a broader investment strategy.