By Sam Boughedda
In a note to clients Thursday, RBC Capital analyst Joseph Spak said the "most critical part" of the near-term Rivian Automotive Inc (NASDAQ:RIVN) story depends on the electric vehicle company hitting its 2022 25k production target.
The analyst, who reiterated an Outperform rating and $77 price target on the stock, provided a deliveries preview with the expectation that Rivian will report second-quarter deliveries in early July.
"Based on our RBC Elements powered normalized foot traffic data which attempts to track the pace of production at RIVN's Normal plant, we believe current expectations for 2Q22 deliveries look very reasonable," said Spak. "Further, we believe the current pace of production may be back near the highs."
The analyst explained that Rivian's last official production update came on 5/11 when it reported production of 5k units through 5/9. From this, Spak said RBC is "able to calculate that RIVN produced ~1.4k vehicles or ~260/week since 3/31."
"Even if that pace subsisted, it would suggest a 2Q22 production level of ~3.4k (260*13). However, since 5/9, our RBC Elements powered normalized foot traffic data (see inside) at RIVN's Normal plant has increased by an average of ~9% and reached a new high for the week ending 6/9. We believe this indicates that the production rate may have improved some through May and June, and note this is consistent with management commentary during 1Q22 earnings," wrote Spak.
RBC is forecasting 3.6k deliveries in the second quarter. They added that Rivian's app download data also support an increasing pace of deliveries.
However, Spak explained that the main focus will be on the 2022 25k production target.
"In our view, the most critical part of the near-term RIVN story depends on hitting their 2022 25k production target. Ideally, we would have liked to see even more improvement in 2Q22 production."
Rivian shares fell 2% Thursday