After plummeting to a historic low of $11.68 per share in April, the shares of Rivian Automotive (NASDAQ:RIVN) have surged by over 100%, reaching an 8-month peak in late July. This upward surge in Rivian’s stock price has significantly impacted short positions, rendering them unprofitable. Among U.S. electric vehicle manufacturers, the second largest short position after Tesla (NASDAQ:TSLA) belongs to Rivian Automotive. Investors are eagerly awaiting Rivian’s quarterly earnings report, set to be released today, to gauge the potential extension of the short squeeze.
Data from S3 Partners LLC indicates that short interest in Rivian Automotive has climbed to 13% of the tradable shares, equivalent to approximately $2.2 billion in stock value. The substantial short position could potentially fuel further momentum in a short-covering rally. S3 Partners stated, “Rivian shorts are becoming more vulnerable. Losses are the catalyst for a squeeze, and Rivian shorts have been incurring losses over the past month.” Should Rivian’s earnings results manage to impress the market, the short-covering trend might persist.
The primary focus of Rivian’s earnings report will be the company’s progress toward achieving profitability. While the quarterly gross margin for Rivian is expected to remain negative until the Q4 of 2024, any indications of enhanced profitability will help alleviate concerns regarding the company’s sustainability. Following supply chain challenges, Rivian rebounded and reached an 8-month peak last month by reporting the production of 13,992 vehicles in the three-month period ending on June 30, surpassing the consensus estimate of 12,562.
Rivian Automotive continues to be one of the largest initial public offerings on U.S. stock exchanges, having raised nearly $12 billion since its public debut in late 2021. Despite the recent rally, the stock remains 86% below its all-time high registered in November 2021. Rainmaker Securities LLC remarked, “Rivian shares currently reflect a highly positive anticipation of today’s earnings results, and the company has hinted at capacity improvement in recent statements.” However, “any divergence from this could lead to a decline in the stock, which is already trading at a considerable multiple.”
Several analysts hold an optimistic outlook for Rivian Automotive, particularly in light of Lucid Group’s (NASDAQ:LCID) recent climb of over +5%. Lucid Group reaffirmed its production outlook and announced intentions to manufacture a minimum of 10,000 vehicles this year. SPEAR Invest commented, “Increased short interest ahead of earnings suggests low expectations, creating a favorable scenario for Rivian Automotive, as short interest is common in high-stakes stocks and can work in favor when shorts need to cover.”
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