Short Selling

Short Selling Report: Rivian Automotive Inc (RIVN:US)

Rivian Automotive Inc
(RIVN:US)
12 months:
-61.48%
Activity:
Bearish
Pattern:
High short interest
News:
Supply chain problems
Rivian Automotive Inc
(RIVN:US)
12 months:
-61.48%
Activity:
Bearish
Pattern:
High short interest
News:
Supply chain problems

Short selling data can help investors make more informed investment decisions. If short sellers are targeting a stock, there’s often major risks to be aware of.

In this report, we are going to discuss the short selling data on Rivian Automotive Inc (RIVN:US). Rivian is an electric vehicle (EV) company that offers a range of electric adventure vehicles. Its flagship model is the R1T pick-up truck, which recently won the MotorTrend Truck of the Year award. The company is listed on the NASDAQ Global Select Market and currently has a market capitalization of $34.9 billion.

Rivian Automotive Inc: Short Selling Data

Looking at the short selling data on Rivian, we see three major red flags. The first is that short interest is sky-high. At present, 79.5 million Rivian shares are on loan, representing 49.5% of the free float.

The second is that short interest has surged recently. The last time we covered Rivian, in late January, there were 31.6 million shares on loan (20.4% of the free float). However, since then, the figure has risen by around 150%. This indicates that short sellers have been ramping up their short bets.

The third flag is in relation to utilization – a measure of demand from short sellers. Back in late January, utilization was just below 50%. However, today, it is sitting at 100%. This tells that demand for stock from the short sellers is very high right now.

Different short selling measures are depicted in this diagram, which gives shorting statistics.

Why Are Short Sellers Targeting Rivian Stock

As for why short sellers are targeting Rivian right now, we have a number of theories.

The first is the potential for supply chain / cost issues. In December, Rivian told investors that it expected production to be short of prior guidance due to supply chain issues. Then, in mid-March, it halved its production forecast, pointing to struggles with raw material prices and supply chain constraints. We think it’s likely that these issues will persist for the remainder of 2022. It’s worth noting that prices of lithium and nickel have spiked recently.

The second is that Rivian will most likely have to raise capital in the near term, in order to boost production. And with interest rates rising, the cost of capital is going up.

Finally, there’s the valuation. Rivian has only produced a handful of vehicles so far, yet it has a market capitalization of $34.9 billion. Assuming it can hit analysts’ 2022 revenue forecast of $2.01 billion, the stock’s price-to-sales ratio is 23. That’s high.

Given the high level of short interest here, we think caution is warranted towards Rivian stock. We see risk to the downside.

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