The electric vehicle (EV) startup Rivian Automotive (RIVN) conducted its IPO on November 10, raising nearly $12 billion. However, the stock tumbled last Friday to its lowest price since its stock market debut, after the company cited supply chain issues and production constraints in its latest earnings report. RIVN also expects its production to fall short of its 2021 target. So, is it wise to buy the dip in RIVN? Read on.Electric vehicles (EV) manufacturer Rivian Automotive, Inc. (RIVN) in Irvine, Calif., made its public market debut under the ticker "RIVN" on November 10 at an initial offering price of $78.00. RIVN’s market value hit $127.30 billion at the close of trading on November 12, just three days after it went public. However, its shares slumped nearly 15% in price last Friday to hit the lowest level since its IPO, after the company cited operational disruptions that could hinder its production plans. Due to supply chain disruptions, the company expects its production to fall "a few hundred vehicles short" of its 2021 target of 1,200. RIVN’s pre-orders for its pickup R1T and special utility vehicle R1S were 71,000 units, up from October, but according to some analysts, it is on the low end of expectations.
Furthermore, given the production challenges, the company could struggle in building volumes as demand rises. "The strong order book provides support for the production ramp, though it does add pressure to get vehicles to customers that may get impatient as current R1 orders won't be ready until the end of 2023," according to Wells Fargo (NYSE:WFC) analyst Colin Langan.
Over the past five days, RIVN stock has slumped 21.8% in price to close its last trading session at $96.82. The stock has been down 30% for the past month. However, it climbed 7.6% in yesterday’s trading session in part on Senate Majority Leader Charles Schumer’s optimistic comment that the Senate would try to hold a re-vote early next year to pass the potential Build Back Better bill. If passed, the bill, with considerable provisions to boost the EV industry, could benefit RIVN, but uncertainty remains. In addition, the EV startup plans to start building its EV plant in Georgia next summer, and the facility will be capable of producing up to 400,000 vehicles per year. However, production is not expected to commence until 2024.