Why Do the Rivian Stock Stock Rise After Earnings?

Why Do the Rivian Stock Stock Rise After Earnings? ...

Rivian (RIVN) - Get Rivian Automotive, Inc. Class A Report released its first-quarter (Q1) results on May 11 while some analysts assessed the company as well. Rivian failed to exceed consensus revenue and EPS.

The first reaction in the first minutes that the results were published was pessimistic, as the stock dropped more than 6%. However, Rivian''s trading session increased 19% after the results were more calmly administered. Rivian had dropped more than 35 percent in the previous five trading sessions prior to its earnings day.

The results from Rivian''s Q1 have to be interesting. Here''s a closer look.

Figure 1:Why Did Rivian Stock Rise After Earnings?

Rivian is a popular sport.

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Not a Demand Problem

Revenues for Q1 were $95 million, while experts were anticipating $114 million. And the loss per share was $1.77, while the consensus was $1.50.

The company also reported a capital loss of $1.6 billion against a consensus of $1.5 billion. However, the results were not so bad because the company reduced its cash consumption by comparison to the previous quarter.

The company had already reported production and delivery numbers earlier, so there were no significant surprises. Last quarter, Rivian delivered 909 vehicles and revenues hit $54 million. In Q1, Rivian delivered 1,227 vehicles, which is nearly doubled its revenue.

Pre-orders from Amazon (AMZN) are on the rise, according to Rivian.com, Inc. reports for its EDV (Electric Delivery Van).

One of the biggest concerns was how Rivian''s business might be affected by global supply-chain concerns. This year, the company announced that it would produce 25,000 automobiles.

Rivian had produced around 5,000 automobiles from May 9, which is double what it had made in March.

What''''s Wrong With the Equity?

Rivian''s stock has been in full swing since its much-hyped IPO in November last year. At the time, it was riding a wave of bullishness around the electric vehicle (EV) hype. It was marketed as a $116 billion zero-revenue business.

Although Rivian''s IPO, as well as the bearish macroeconomic scenario that was looming, may have been unable to assist Rivian''s stock. Since the end of 2021, EV stocks in general, as well as other growth and tech stocks have been sharply declining.

While having a weaker outlook on Rivian stock and anticipating a $30 price target, Wedbush analyst Dan Ives considers Rivian "a train wreck since its IPO" and an overall black eye for the electric vehicle industry."

Rivian''s price rise scandal has been dubbed a "comedy of mistakes," according to Ives.

What''''s Next for RIVN Shares?

Although Rivian did not declare an earnings breakthrough, Q1 deliveries were decent. It fazed Wall Street, which was expecting moderate supply-chain issues.

Rivian is priced as a growth stock. The price the market pays is based on its future growth potential and the demand for its technology. Q1 has just shown that demand for Rivian''s models continues to grow.

Rivian may be undervalued by the Mizuho analyst, because he trades at a more than 50% discount than Tesla (TSLA) - Get Tesla Inc Report, has a large potential for revenue growth of more than 230% by 2023, and has $17 billion in cash.

Rivian still has a lot to prove, especially if it will be able to maintain or accelerate its production and if its demand is strong. In the near future, the macro scenario will continue to dictate the bearish tone for Rivian, and we may see even greater drops in its stock. However, Rivian will return to growth if these issues happen.

(Disclaimers: this is not investment advice. The author may be long one or more stocks mentioned in this report. Also, the article may contain affiliate links. These partnerships do not affect editorial content. Thank you for assisting Wall Street Memes)

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