Story Stocks^®

Rivian Automotive (RIVN +22%) is flooring it today, moving to its best levels since July following uplifting Q4 production and delivery numbers. The electric truck and SUV maker produced 12,727 vehicles and delivered 14,183 during the quarter, ending FY24 with 49,476 vehicles produced and 51,579 delivered. The company's FY24 numbers were consistent with its guidance of 47,000-49,000 vehicles produced and 50,500-52,000 delivered.

• Why would meeting expectations evoke such an energetic response today? The market was forecasting weaker results. Street estimates pegged RIVN's Q4 deliveries at under 14,000, ending the year at around 50,900, well below RIVN's actual delivery figure. Production results also crushed estimates, which were similarly bearish due to supply shortages RIVN touched on in October.
• Following underwhelming Q3 production and deliveries, RIVN slashed its FY24 production target to 47,000-49,000 from 57,000. The supply shortages stemmed from RIVN's Gen 2 relaunch. Over half of the parts in these new models were changed, prompting RIVN to lean on different suppliers. Given this context, topping the high end of its lowered guidance by 476 units is encouraging enough to light a match under the stock today.
• At the same time, RIVN commented today that a component shortage impacting its ability to produce Enduro motors will no longer constrain its future production. In early November, RIVN mentioned that its team was focused on addressing this component shortage. Clearing this overhang so quickly is another underlying factor in today's upward momentum.

With a significant component shortage out of the way and RIVN demonstrating its ability to shift gears quickly and exceed its lowered FY24 production and delivery guidance, market participants are excited over RIVN's potential in 2025. RIVN has a massive opportunity ahead with its joint venture with Volkswagen AG (VWAGY). The up to $5.8 bln in proceeds RIVN expects to receive from the joint venture combined with its $6.7 bln in cash provide the company with ample funds to power its growth roadmap, including the ramp of R2, its midsize SUV starting at under $50,000, which is expected to be released in 2026.

Nevertheless, RIVN has run into many speedbumps in the past, which can lead to heightened uncertainty and performance variability each quarter. Furthermore, with the Federal Reserve signaling fewer-than-anticipated rate cuts in 2025, financing costs may remain an issue. RIVN's vehicles are typically priced above $70,000, prompting consumers to lean on financing options. Lastly, investors may want profitability to improve, especially with RIVN projecting a modest GAAP gross profit in Q4. Hiccups in improving its bottom line could disappoint investors.