Rivian stock (RIVN): Rivian share price rally on its new partnership with Mercedes

Rivian is an electric vehicle and automotive technology company founded in 2009. Rivian shares went public in November last year at $78 per share. However, the Rivian shares have seen a downward trajectory since the start of the year and has fallen more than 63%. However, this week, Rivian share price gained more than 16%. In this article, we will look at what is driving the stock rally.

Rivian partnership with Mercedes-Benz

• The two companies announced that they will join hands to build big electric vans in Europe.
• On Thursday, Rivian shares jumped 11% and added $3 billion to its market capitalization post the update.
• The companies intend to open a new factory in Central/Eastern Europe, where Mercedes-Benz has an existing site. 
• According to the statement, the joint venture would start production in a few years.

Rivian Q2 results

• The EV maker reported better than expected second-quarter results.
• However, the electric vehicle maker forecasts deeper losses for the year as ongoing supply-chain issues continue to hold back production.
• The company reported a loss of $1.62 per share and revenue of $364 million. It is above estimates of $1.63 and $335.4 million, respectively.
• Rivian produced 4,401 vehicles in the second quarter, up from 2,553 in the first quarter. 
• It cut its guidance on adjusted EBITDA to a loss of $5.45 billion for the year, compared with a prior forecast for a loss of $4.75 billion.

Rivian's Management Update

The company made some changes in the top leadership in recent months. They brought in a new Chief Operating Officer in June, Frank Klein joined as COO.

Charly Mwangi, the head of manufacturing engineering is leaving Rivian.

The company is dividing its commercial business with one group focused on its B2B vertical and the other on its B2C vertical. Jiten Behl will lead the B2B business, which includes commercial vans and Rivian's relationship with its flagship customer, Amazon.

Rivian's Pre-order numbers

As of 30 June, the company had nearly 98,000 pre orders across R1T and R1S aside from the 100,000 orders from EDV it already secured earlier from the e-commerce giant - Amazon. 

Rivian originally planned to ship 50,000 vehicles by the end of this year, but it reduced that target to 25,000 vehicles back in March. The company is struggling with supply chain issues. As of June 30, it's only manufactured about 9,000 vehicles.

Rivian share target price

• Wedbush analyst Dan Ives has maintained an OUTPERFORM rating and has raised its stock price target from $40 to $45 reflecting further confidence in the production story.
• Canaccord Genuity Group started coverage on Rivian shares in July and issued a BUY rating and a $61.00 target price on the stock. 
• Piper Sandler decreased their target price on shares of Rivian from $112 to $108 in their May report.