On Dec. 17, 2021, California-based Rivian Automotive (NASDAQ:RIVN) was the number-one trending ticker on Yahoo Finance, and was a hot topic of conversation on StockTwits. So, that should be good news for RIVN stock holders - right?
Don't get your hopes up. Remember, just as stocks can be buzz-worthy for soaring, they can also be the center of attention when they're tanking.
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Sure, there was a Nasdaq-driven tech wreck going on in mid-December, but RIVN stock's debacle wasn't mostly about that. Rather, there was a definite, company-specific catalyst that sent Rivian's shareholders into a tailspin.
So, much like the aftereffects of an automobile collision, it's necessary to sift through the wreckage and assess the damage. Only the data can guide us now - and the hope of better production numbers on the next go-round.
Going back to the beginning, Rivian's initial public offering (IPO) was priced at $78 per share, and the stock opened for public trading at $106.75 on Nov. 10.
As it turned out, RIVN stock actually started off quite well, rising for five consecutive trading days after Rivian's IPO.
However, it was all downhill from there. The first steep stumble occurred on Nov. 17, when the Rivian share price tumbled by as much as 18% in a single trading session. On that day, RIVN stock landed in the $140s. By the middle of December, it fell all the way down to the $110s.
Then came Dec. 17, as the Rivian share price sank into the $90s. Midday, the stock was down 14%. Was this an overreaction, or a justified share-price haircut? We'll let the data, along with a healthy dose of common sense, guide us toward a conclusion.
With so much competition nowadays, it's undoubtedly not easy to compete as an electric vehicle (EV) maker. Moreover, it certainly doesn't help when a company misses the investing community's expectations.
Evidently, that's what happened recently when Rivian released its first earnings report as a publicly traded business.
Reportedly, Rivian expects to fall "a few hundred vehicles short" of its goal to produce 1,200 vehicles this year. Rivian's management's initial target was for roughly 1,200 vehicles to be made in 2021.
Through Dec. 15, Rivian had only produced around 650 trucks. Clearly, the company won't make anywhere near 1,200 vehicles by the end of the year.
Wedbush analyst Dan Ives identified a global issue - shortages of requisite materials - as a likely contributing factor.
"The ability to ramp the factory in Illinois, coupled with component shortages [are] the culprit[s] for the shortfall," Ives clarified.
Still, even as he acknowledged Rivian's obstacles, Ives didn't lean bearish on the electric truck maker. In fact, the Wedbush analyst gave Rivian Automotive a "buy" rating along with a generous $130 price target.
"The Street will be disappointed to see a delivery shortfall, however this is a supply issue and clearly not a demand issue for Rivian," Ives explained.
And indeed, there's no demand destruction as Rivian recently counted around 71,000 reservations, a significant increase over the 48,000 reservations recorded at the end of September.
In a similar vein, RBC analyst Joseph Spak rated RIVN stock a "buy" while issuing an even more optimistic price target of $165.
"Demand strong with orders accelerating but production hitting some early bumps," Spak observed, mirroring Ives's assessment.
"We don't believe this impacts the medium-term investment case, but it does highlight that [the company] has a lot on its plate," the RBC analyst concluded.
The demand for Rivian's EVs is there, but there's a supply-chain issue which could hamper the automaker's progress in achieving its production targets.
So, if you're confident that the supply-related problems will clear up soon, then a long position in RIVN stock could make sense.
Just don't expect the stock to return to its prior peak price anytime soon. As the negative press coverage fades, Rivian's stakeholders should hope for a recovery that's slow, but sustainable.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content - and crossed the occasional line - on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.