09:08 AM EDT, 10/04/2024 (MT Newswires) -- Rivian Automotive ( RIVN ) may not achieve positive gross margins by the end of the year if its shortage issue doesn't improve soon, Truist Securities said Friday in a note, in response to the automaker cutting its 2024 production targets amid a component shortage affecting its R1 and RCV units.

"While a reiterated delivery guide for the year may provide investors some level of comfort on the demand side of the equation, concerns on [Rivian's] production and gross margin trajectory given lack of color into the nature/magnitude/expected timeline of the component shortage are likely to weigh on shares," Truist analysts said.

Rivian reported Friday that it produced 13,157 vehicles and delivered 10,018 during Q3, both which Truist noted were below analyst expectations by 10% and 15%, respectively. The automaker also reduced its 2024 production outlook by 9,000 units at the midpoint.

Truist said it is also negative on the stock given Rivian's current investment deals with Volkswagen, which includes a joint venture and yet to close, as the recently announced production challenges could weigh on gross margin targets.

Shares of Rivian were down nearly 7% in recent Friday premarket activity.

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