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Sometimes bad news is good news for stock investors. That was the case today after electric vehicle (EV) maker Rivian Automotive (RIVN 2.13%) reported the final tally for 2022 vehicle production that missed its own estimates. So it might be surprising that the stock jumped as much as 4.2% and remained higher by 3.1% as of 1:55 p.m. EST. But there were good reasons the stock gained on the news.
Rivian stock had recently dropped to an all-time low price, so reduced investor expectations for fourth-quarter and full-year deliveries were already built in. But the more important reason for a positive reaction in the share price came from the progress Rivian’s Q4 production represented.
Rivian produced just over 10,000 vehicles in Q4, bringing its 2022 total to 24,337. That slightly missed the already reduced projected volume of 25,000. But more importantly that quarterly production represented growth of 36% sequentially quarter over quarter.
Even after a more than 80% drop in Rivian shares in 2022, Rivian’s market cap remains close to $17 billion. At that valuation, the investment thesis relies on strong and continued growth in production volume. The company faced plenty of headwinds in 2022, and plenty of those same risks remain for investors.
Image source: Rivian Automotive.
But it’s a good sign that Rivian has been able to navigate through supply chain snarls and show a big jump in production volume over the last six months. Whether it can also overcome higher raw material costs and growing competition remains to be seen. Rivian should report its Q4 financial and operational update sometime around Feb.1. That’s when investors will know what to expect going forward. But the initial production data gives investors some amount of optimism today.
Howard Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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