Rivian (RIVN) is a young automaker in the midst of a slowdown in EV growth in the U.S. market. Because of that, investor focus on the company's production, deliveries, and cash burn has been magnified -- and rightfully so.
Each of those metrics could cause big swings in the stock price depending on fluctuations in the numbers. But with the focus on those metrics, investors have overlooked a potential catalyst for the company that could register in the first quarter.
Delivery vans
Many investors have simply forgotten about Rivian's deal with Amazon that was set for 100,000 electric delivery vans by 2030. In fact, not only was it nearly forgotten as a potential catalyst, it was even viewed negatively last year when Amazon's first order checked in at 10,000 -- on the low end of annual guidance between the two companies.
But let's assume for a second that Amazon wanted to start things slow, and let Rivian work out the kinks of its production line. Remember there were huge bottlenecks with the R1T and R1S. What if Amazon simply wanted to kick the tires on real-world testing of the electric delivery vans before accelerating their order schedule?
Investors have forgotten, or perhaps presumed that Amazon's next order would check in again at the 10,000 mark.
But what if it doesn't?
It's entirely possible that last year Amazon's order for electric delivery vans checked in on the low side of guidance, and that this year's order could tilt toward the high end of guidance now that Rivian has a full year of the production partnership under its belt. Could Rivian's stock spike on news that Amazon decided to double that order number this year?
Moreover, due to Amazon's lower-than-anticipated first order, the two companies ended their exclusivity agreement that enables other companies to purchase Rivian's electric vans. AT&T has already signed up, although specific details and order size remain under lock and key.
And as my colleague pointed out, there are a slew of potential customers that Rivian could ink deals with. Consider that in 2020 United Parcel Service ordered 10,000 electric delivery vans from Arrival, with the latter struggling enough for UPS to consider new electric van sources.
Similar delivery companies such as DHL Group and FedEx both own fleets of tens of thousands of delivery vans and are strategically phasing in electrification, with the latter aiming for 100% of its new delivery vehicle purchases to be electric before 2040.
A hidden catalyst
Investors have rightly zoomed in on production and delivery figures when cracking open Rivian's results. That's because the company is aiming to be gross profit positive in 2024, which means production needs to accelerate, perhaps even double during 2024.
But let's not forget that as disappointing as Amazon's order in 2023 was, it could be just as equal a boost in 2024. Stay tuned, as it could be the early catalyst Rivian needs to continue its momentum from last year.
