Rivian Automotive Stock News: After 17% spike, can RIVN uptrend last through July?

• Rivian stock closed 17.4% higher on Monday.
• Rivian raised its deliveries by 59% from the first quarter.
• The $22 level needs to be broken for RIVN stock rally to form long-term uptrend.
• RJ Scaringe reiterates guidance for 50k units in 2023.

 

Rivian Automotive (RIVN) stock surged 17.4% on Monday to a more than four-month high on the back of delivery news that was strong enough to overshadow Tesla’s (TSLA) own Q2 delivery release. Elon Musk’s company added nearly 7% on Monday on the back of a 4.8% consensus beat on second-quarter deliveries, which led to an impressive performance across the electric vehicle sector.

Rivian’s 11.9% beat of the Q2 delivery consensus lifted RIVN stock even higher since the much smaller electric pickup truck maker has spent much of the year at a depressed valuation. The market is closed for the July 4 federal holiday.

Rivian stock news: 50,000 full-year delivery goal now a near certainty

Rivian CEO RJ Scaringe began 2023 with an outlook for 50,000 deliveries. That guidance became less certain when the automaker delivered just 7,946 vehicles in the first quarter. 

On Monday, however, that goal became much more likely when Rivian announced Q2 deliveries of 12,640. That amounts to a 59% growth rate in just one quarter.

Production also leapt from 9,395 in Q1 to 13,992 in Q2 – a 49% QoQ increase – at Rivian’s factory in Normal, Illinois. The difficulty of ramping up production was viewed as a major impediment to meeting the 50,000-unit delivery guidance earlier this spring, but management appears to be reaching its internal targets on the operational front.

Total deliveries in the first half of the year amounted to 20,586. In other words, deliveries need to grow by just a little over 10% QoQ in each of the third and fourth quarters to achieve the goal. If that sounds achievable following a 59% ramp up in deliveries, then one can see why the stock exploded so meaningfully on Monday. The chance that Rivian exceeds the 50,000 figure has become quite likely.

It is still hard to tell how much the greater production level will improve margins until management releases Q2 earnings results in a little over a month on August 8. Consensus was expecting a GAAP loss of $-1.53 on revenue of $957 million, but expect that consensus to improve this month once analysts return from the July 4 holiday. The two most recent analyst notes from Truist Securities and Canaccord Genuity on June 20 both reiterated Buy ratings for RIVN and handed it price targets of $28 and $40, respectively.

Lucid (LCID), Fisker (FSKR), Li Auto (LI) and Nio (NIO) all rallied strongly on Monday on the coattails of Tesla and Rivian.

Rivian stock forecast: RIVN needs to break $22 at all costs

Rivian stock’s impressive gap up on Monday reached as high as $19.70, a price level investors have not seen since February. After caving from an all-time high just below $180 in November 2021 following its IPO, Rivian stock lost 90% of its value over the ensuing year. Now Rivian is up nearly 13% year to date.

To ensure that RIVN price does not collapse during the rest of the year, bulls need to force a close above $22. The $21 to $22 resistance window kept bulls at bay on a half dozen sessions during that early part of the year. 

RIVN stock has not closed above $22 a share since December 19 of last year. A break of that barrier is all that is needed to unleash a long-term uptrend in the back half of this year. Further resistance, however, should come in at $25, $31 and $40. Those price levels, many of which result from areas of support on Rivian’s long downtrend, would result in gains of between 25% and 100% from this point.

On the other hand, the Relative Strength Index (RSI) currently provides an overbought reading of 75, so keeping an eye out for long-term support in the mid-$15s and at $12 could be wise. This is a stock that absolutely requires stop-loss orders. Failure to break and close above $22 will lead to many traders pocketing their recent profits.

RIVN daily chart