Rivian Automotive (RIVN 2.62%) stock has been in freefall this week -- and it was down another 6.7% Thursday as of 1:30 p.m. ET.
If an analyst downgrade butchered the electric vehicle (EV) stock Wednesday, the double whammy of yet another downgrade and a solid earnings report from EV leader Tesla (TSLA 0.86%) is crushing Rivian shares Thursday.
Although Deutsche Bank cut its price target on Rivian stock to $90 per share Thursday morning, that was only a marginal drop from its previous target of $91 per share. The bank also kept its buy rating on the stock, which is trading at less than half that target price. This suggests that Tesla's success may have more to do with this latest drop in Rivian's share price.
Tesla just reported record first-quarter results. Its deliveries surged 68% year over year, and its operating margin jumped to 19.2% from 14.7% in the fourth quarter. That's despite soaring raw material prices and supply constraints that have hit the entire automotive industry hard -- and even led Tesla to increase the prices of its EVs multiple times in recent weeks. Yet its profits more than tripled year over year in Q1 to $3.3 billion as the automaker proved, yet again, capable of navigating the macro-economic storms in ways that other EV makers haven't been able to.
Case in point, Rivian seems to be buckling under those inflationary and supply chain pressures. Earlier this month, it said supply chain headwinds were adding to its costs, and that it expects to produce only 25,000 EVs in 2022 -- half the number it could manufacture in the absence of those supply constraints. Tesla's production volume, by contrast, jumped 69% year over year in Q1.
Now, the EVs Tesla already has on the market don't directly compete with Rivian's R1T pickup truck, but its Cybertruck will. And it just confirmed that it's making progress on its plans to start manufacturing the Cybertruck.
What's perhaps even more concerning is that Tesla management says it expects the supply chain headwinds to continue for the whole year. That could pose a major challenge for EV start-ups like Rivian. Yet Tesla still expects to expand its manufacturing capacity "as quickly as possible." Also, it appears Tesla will be able to pass on its higher expenses to consumers without trouble. Rivian cannot say the same.
Rivian already dashed investors' hopes when CEO Robert "RJ" Scaringe warned about the supply chain headwinds earlier this week. With Tesla confirming that it expects those headwinds are here to stay, Rivian investors may now be feeling nervous about the company's ability to produce even 25,000 vehicles this year.