Sign InRivian's Positive Q3 Earnings Drive Share Value Up, Raises Production Guidance
Summary
Rivian Automotive, Inc. reported positive Q3 earnings results, surpassing Wall Street's estimates and narrowing its loss, leading to an increase in share value; however, the high volatility and bearish MACD indicate potential risks for investors, although the solid business model and recent earnings beat make it an attractive investment for those with a higher risk tolerance and long-term perspective. (Analysis date: November 7, 2023)
Fundamental Analysis
Rivian Automotive, Inc. (RIVN), a prominent player in the electric vehicle sector, recently reported positive results in its Q3 2023 earnings announcement. The company exceeded Wall Street's consensus estimate with a quarterly revenue of $1.34 billion against a prediction of $1.31 billion. Its adjusted loss of $1.19 per share was also narrower than the expected loss of $1.33 per share. This positive outcome has resulted in an increase in RIVN's share value in after-hours trading.
More significantly, Rivian narrowed its quarterly loss and revised its full-year production guidance upwards. The company now expects to produce 54,000 vehicles in 2023, a notch higher from its prior expectation of 52,000 vehicles. This suggests a healthy demand for Rivian's vehicles and effective management of the production process. Additionally, the firm stands out amongst its peers in the EV market, with recent comparisons showing that Rivian has a more solid business model than some competitors such as Lucid Group Inc.
Despite these positive indicators, Rivian's current EPS stands at a negative $6.46. The PE ratio is also negative at -2.7, which could be problematic for some investors. However, the company's market capitalization of that stands at $16.38 billion suggests that the market has a fair degree of confidence in Rivian's long-term prospects.
Technical Analysis
Rivian's shares closed at $17.42 on November 07, 2023, marking a slight change of $0.24, or a 1.40% increase from the previous day. The observed trading volume was 39.82 million, slightly over the company's average volume of approximately 35 million. While this could suggest a higher interest in the stock, care should be taken as trading volumes also tend to increase on earning announcement days.
An analysis of the moving averages suggests that the stock has been slightly bearish in recent times. The 50-day moving average at $20.53, is higher than the last close, and also higher than the 200-day moving average at $18.22. However, it is worth mentioning that the stock price is closer to the 200-day moving average right now, which could suggest the beginning of a positive price swing in the mid-to-long term.
The RSI of 45 suggests a balanced market, neither overbought nor oversold. However, the bearish MACD (3-month) of -1.87 suggests that the stock had a short-term bearish trend, which could have been impacted by uncertainties ahead of the earnings release.
The ATR of 6.52 indicates high volatility which reflects the drastic price shifts the stock has observed in the past trading periods. Currently, the stock finds a support level at $17.16 and faces resistance at $18.27.
Analyst Consensus and Target Prices
Analysts have maintained a "Buy" consensus on RIVN. With 14 recommending "Buy", two holding a neutral "Hold" position, and two suggesting "Sell", the overall sentiment leans towards the positive.
Despite this, there exist wide disparities in the target prices. The high target of $147 and the low target of $14 underline gross differences in opinions about the future of this stock. However, the consensus target and median target at $53.1 and $33 respectively suggest that many analysts see considerable upside potential for the stock.
Price Forecast and Stock Recommendation
Given the stock's positive momentum following the earnings announcement and the increased production guidance, Rivian's stock targets an upbeat outlook for the next trading day on November 08, 2023, and the upcoming week, such that it may challenge the current resistance level of $18.27.
However, the high volatility of the stock, coupled with the bearish MACD and PE ratio, suggests potential risk. For investors comfortable with the risk associated with high-growth, high-volatility stocks in a transformative industry like EVs, Rivian presents a compelling investment case with its demonstrated ability to outperform expectations.
In conclusion, based on the above fundamental and technical analysis, the stock can be classified as a "Hold" due to the potential risks. However, investors with a higher risk tolerance and long-term perspective may consider it a "Buy", based on the company's strong business model and recent earnings beat.
Disclaimer: This analysis does not consider individual investment objectives, financial resources, or needs, and should not be interpreted as a recommendation to buy or sell anything. All investors should conduct their own research or consult with a registered investment advisor before making any investment decision.
