Rivian Automotive Production Exceeds Expectations, Stock Suffers

Rivian Automotive, the electric-vehicle company, recently announced its impressive fourth-quarter production numbers, surpassing expectations. However, this positive news seems to have resulted in a drop in stock prices as investors execute a classic case of “selling the news.” The shares had already rallied before the report was released.

Strong Production Numbers, Concerns about Deliveries

On Tuesday, Rivian revealed that it had produced a total of 17,541 units in the fourth quarter, bringing the full-year production to 57,232 units. This performance surpassed the company’s previous guidance of 54,000 units provided in November. Despite these remarkable production figures, Rivian’s stock experienced an 8.4% decline in early trading. In comparison, the S&P 500 and Nasdaq Composite were down by 0.8% and 1.6% respectively.

The concern seems to be focused on deliveries rather than production. While production reached record-breaking levels, with a significant increase of about 135% year over year, Rivian managed to deliver only 13,972 units, a decrease from the 15,564 units delivered in the third quarter. It is worth noting that there is typically a time gap between production and deliveries for growing electric vehicle producers. However, this current gap represents the largest in Rivian’s limited history. Nevertheless, this issue should not have a significant impact on the company’s shares as all the vehicles produced are being sold. Therefore, there is no backlog of unsold cars.

Stock Prices Affected by Previous Surge and Expectations

The drop in Rivian’s stock prices might also be attributed to the fact that they had experienced a significant surge leading up to the report release. In the month preceding Tuesday’s trading session, the stock had already increased by 32%.

This surge was partially fueled by high expectations of strong production results and an anticipation of interest-rate cuts in 2024. Lower interest rates not only make electric vehicles more affordable, but they also provide easier financing opportunities for startup companies like Rivian.

Despite the drop in stock prices, it is important to note that the results are not unfavorable. Rivian will report its fourth-quarter results on February 21.

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