RBC analyst Joseph Spak has reflected positively on Rivian's (RIVN) production ramp efforts.
The analyst said he is more confident in his Q1 delivery forecasts of 2,100 units and sees scope for upside. RBCs data shows an improving production ramp, Spak said in a client note.
Earlier this month, Rivian suggested they produced 1,410 vehicles in 2022 but said that in recent weeks the average weekly production rate was practically doubled to Q421 numbers.
RBC estimates the weekly production of around 320 vehicles per week. This implies a Q122 production level of ~2.37k.
We note that Visible Alpha consensus 1Q22 deliveries is 1.5k (but based on only 7 inputs). We forecast 1Q22 production is closer to the 2.4k level but assume that ~1 week of production is in transit, Spak added.
The analyst also weighed in on the massive selloff in Rivian shares.
The bar has been reset, we continue to have faith in management, the product, the business plan and the go-to-market strategy. We also believe Rivian is thinking thoughtfully about the entire value chain and how that needs to evolve (down and upstream). The near-term risk is supply chain, but we believe management contemplated the risks in their revised outlook. We view current levels as an attractive entry point for long-term holders. Tactically, as shown above, we may start to get more positive data points. Hitting near-term expectations can lead investors to gain more confidence in outer-year potential. And the valuation looks relatively attractive with an interesting risk/reward, Spak added.
By Senad Karaahmetovic