Rivian automotive sector (NASDAQ: RIVN) stocks end the week with a thud. Shares fell Friday morning after the company provided its third-quarter vehicle delivery update and revised 2024 production guidance.
Rivian shares fell as much as 8% when the company notified investors of a parts shortage. The stock remained down 7.3% as of 10:30 a.m. ET.
The production problem, not the demand
Rivian expects to produce between 47,000 and 49,000 electric vehicles (EVs) this year. That is lower than the previous expectation of 57,000. While many EV makers have cited a lack of demand, Rivian’s problem is one of supply. The company revealed that production has been disrupted due to the shortage of a part used on both its consumer R1 models and its commercial vans.
Rivian CEO RJ Scaringe mentioned the supply problem at an investor conference last month, without providing details. Scaringe said: “We have had a number of supplier issues [recently] which have been a challenge and in particular a few issues around our internal engines with some components that have been painful and a reminder of how a tiered supply chain can be difficult.”
Shares reversed some of the decline this morning as investors realized demand doesn’t appear to be an issue. Based on existing inventory, Rivian still expects to deliver slightly more vehicles this year than in 2023.
As other EV makers have scaled back production due to a lack of expected demand, it’s promising news that Rivian hasn’t seen any drop in demand. However, how long the parts supply problem will last is a big question for investors. The stock likely won’t recover from today’s news until investors hear more when Rivian releases its full third-quarter report on November 7. Some investors prefer to wait on the sidelines.
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Howard Smith holds positions in Rivian Automotive. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
Why Rivian Stock Plunged Friday was originally published by The Motley Fool
