Rivian's annual deliveries at risk amid implied demand softness - JPMorgan

Investing.com -- Rivian's full-year deliveries may be at risk of being hit by a softening in demand, according to analysts at JPMorgan Chase (NYSE:JPM).

Earlier this month, the electric truck maker announced that third-quarter deliveries slumped by 36% versus the year-ago period to 10,018 -- the lowest mark in over a year-and-a-half.

Meanwhile,   Rivian Automotive   (NASDAQ:RIVN) said it had produced a total of 13,157 vehicles at its factory in the US state of Illinois, due in part to a shortage in an undisclosed component used in all of its products.

Constraints in the supply of the part arose during the quarter and has become more acute in the recent weeks, Rivian said, leading the firm to cut its guidance for annual production to roughly 47,000 to 49,000 units, down from its prior outlook of 57,000.

Despite the slump in output, full-year deliveries at the Amazon-backed group were reiterated at approximately 50,000 to 52,000, which the JPMorgan analysts said could suggest that demand has remained unchanged.

However, they flagged the updated third-quarter numbers indicate that Rivian's inventories -- or production minus deliveries -- rose by 3,139 units during the quarter, which would be its second-largest build in stockpiles ever and well above its historical average gain of 950.

"To us, the implied softer demand trend suggests at least some risk to the outlook for full-year deliveries," the analysts said in a note to clients on Tuesday. "This further lowers our estimates, although the biggest income statement effect is on revenue, given we estimate the company is now likely operating close to contribution margin breakeven."

They added that a hit to Rivian's production could also "endanger [its] [...] growth stock multiple." The analysts slashed their December 2025 fair value target for Rivian shares to $12 from $14, although the estimate still represents a 20% upside to the stock's current level.