Rivian stock forecast: Short interest soars ahead of earnings

By:
on Aug 4, 2023
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  • Rivian share price has surged by over 128% from the year-to-date lows.
  • The company’s short interest has jumped to 15% ahead of earnings.
  • There are concerns about the company’s earnings growth and margins.

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Rivian (NASDAQ: RIVN) stock price has made a spectacular comeback in the past few months as I predicted here. The shares are now sitting at their highest level since December 13th of 2022. It has jumped by over 128%  from the lowest point this year.

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Short interest soaring

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Despite the surge of the Rivian stock price, there are signs that many investors are not convinced. One way of looking this is to consider its short interest, which refers to the percentage of shares held by short-sellers. The company’s short interest has jumped to over 15%, which is equivalent to $2.29 billion. This figure is the highest it has been since May 2021

As a percentage of the float, the short interest has surged to an all-time high of 15%. This means that a substantial number of investors are not optimistic about the company’s prospective ahead of the upcoming earnings.

Rivian short interest

There are several reasons to be cautious of the Rivian stock price. First, there are signs that the company’s margins will come under pressure if it is forced to slash its vehicle prices. There is a possibility that this will happen since Ford has cut prices of its Lightning brand, which competes with Rivian’s vehicles. 

There are also concerns that Rivian’s growth is slowing. The most recent report showed that the company delivered over 12k vehicles in the second quarter. This was a strong figure that beat analysts’ forecasts and signaled that the firm was on track to sell 50k vehicles this year. Still, this growth will likely slow in the coming years.

Still, a case can be made about Rivian, as I had expressed in my previous articles. The firm is gaining market share in the most lucrative sectors in the auto sector since it focuses on SUVs and trucks. Also, the company could break free from its exclusive business with Amazon, opening it to more companies.

Is Rivian stock a buy ahead of earnings?

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Rivian will experience substantial volatility next week as it publishes its financial results. The results will come out on Tuesday after the regular session. Analysts expect that the company’s quarterly revenue crossed the important level of $1 billion in Q2. That will be a strong increase from the previous quarter’s $661 million.

In addition to the headline figures, investors will focus on the company’s forward guidance, gross margins, and the general outlook of the company. Most importantly, investors will focus on the company’s cash burn during the quarter.

Therefore, at this stage, the outlook for the share is neutral with a bearish bias. If this happens, the stock will likely drop since investors are a bit optimisic ahead of the results, which explains why it has jumped before the earnings. As such, the key level to watch will be at $23. The alternative is where the shares jump to $30 after the results.

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