/closeup%20of%20electric%20car%20charging%20by%20Scharfsinn86%20via%20iStock.jpg)
Rivian Automotive (RIVN), a rising star in the electric vehicle (EV) space, has been on a bumpy road in 2024. Amid production hurdles and rapidly intensifying competition, the company has seen its momentum falter. Furthermore, as the global EV sector witnessed a slowdown in sales and struggled to meet lofty expectations, Rivian has also felt the sting, with its shares sliding into negative territory this year.
While the dream of electrifying the U.S. vehicle fleet is still alive, the journey seems to be unfolding at a slower pace than many had envisioned.
However, the tide appears to be recently turning for Rivian, as it proves that customer satisfaction can drive long-term success in the competitive EV market. In Consumer Reports’ latest survey, Rivian ranked first in owner satisfaction among 27 auto brands for the second consecutive year, with an impressive 86% of owners stating they would purchase another Rivian vehicle.
This figure not only eclipses industry heavyweights like Tesla (TSLA), which ranked third, but also leaves legacy automakers like BMW and Porsche behind Rivian. For a startup in an intensely competitive space, these numbers are nothing short of groundbreaking, signaling that Rivian has cracked the code to win over consumers. What’s more, last month, Rivian turbocharged its growth potential with a game-changing partnership with Volkswagen (VWAGY), a veteran automaker with global reach.
The recently announced three-year joint venture could bring Rivian up to $5.8 billion, providing a much-needed infusion of cash as the EV startup scales production and invests in innovation. With Volkswagen’s backing, Rivian could not only bolster its balance sheet but also gain credibility, potentially boosting sales and reshaping its growth trajectory. On top of that, with Benchmark analysts recently issuing a bullish call on Rivian, could this be a green light for investors to load up the stock for potential gains next year?
About Rivian Automotive Stock
Founded in 2009, California-based Rivian Automotive designs and builds groundbreaking electric vehicles and accessories that combine innovation, performance, and sustainability. From their all-electric trucks to their eco-friendly accessories, Rivian’s vehicles are made in the U.S. and sold directly to both consumers and commercial customers.
Valued at a market cap of around $14.7 billion, shares of this automaker are deep in red this year, posting negative returns of roughly 34.5% on a year-to-date basis. But the EV maker appears to be showing signs of a strong rebound amid investors' optimism over its recent alliance with Volkswagen and bullish analyst outlooks, delivering gains of roughly 41% over the past six months alone, far outshining the broader S&P 500 Index’s ($SPX) 12% return during the same time frame.
Apart from its recent strong price action, in terms of valuation, RIVN stock is trading at just 3.27 times sales, a sharp contrast to its industry peer, TSLA, which is priced at a hefty 13.87 times sales.
Rivian Soars After Q3 Earnings Report
While Rivian dropped softer-than-expected Q3 earnings results on Nov. 7 and remained unprofitable during the quarter, shares of the company closed up almost 5.4% in the subsequent trading session. The company’s revenue of $874 million, which includes $8 million from the sale of regulatory credits, fell by 34.6% year over year, largely due to supplier disruptions that impacted production. On the brighter side, Rivian trimmed its loss per share to $1.08 compared to the year-ago quarter’s loss of $1.44 per share.
Furthermore, in Q3, Rivian reported capital expenditures of $277 million, up from $190 million in the same period last year, reflecting continued investment in its growth and production capabilities. The company ended the quarter with a solid liquidity position, boasting approximately $6.7 billion in cash, cash equivalents, and short-term investments. When factoring in its asset-based revolving credit facility, Rivian’s total liquidity reached an impressive $8.1 billion.
In fact, a notable portion of the company’s $6.7 billion in liquidity includes $1 billion from an unsecured convertible note issued to Volkswagen as part of Rivian’s joint venture with the Volkswagen Group, further strengthening its financial position as it navigates through its growth phase. During the quarter, Rivian produced 13,157 vehicles at its Normal, Illinois manufacturing facility and successfully delivered 10,018 vehicles.
Looking ahead, Rivian is confident in its path to achieving a positive gross profit in Q4, fueled by significant strides in operational efficiency. However, as revealed earlier on Oct. 4, the company is grappling with a production setback due to a shortage of a key component in its Enduro motor system, affecting both the R1 and RCV platforms.
As a result, Rivian has slashed its fiscal 2024 production forecast, now expecting to produce between 47,000 and 49,000 vehicles as it works to overcome these supply chain challenges. But, despite these setbacks, the company reaffirmed its delivery target of 50,500 to 52,000 vehicles and projected $1.2 billion in capital expenditures for the entire year. Meanwhile, analysts tracking Rivian Automotive project the company’s loss to narrow 18.1% year over year in fiscal 2024 and shrink another 34.4% in fiscal 2025.
What Do Analysts Expect for Rivian Automotive Stock?
On Dec. 9, shares of Rivian took off more than 11% after Benchmark initiated coverage of Rivian with a "Buy" rating and set a price target of $18, which indicates a healthy 25.3% upside from current price levels. The investment firm is optimistic about Rivian’s future, stating that the automaker is "well-positioned" to seize a substantial share of the rapidly expanding EV market in the coming decade.
Benchmark expects the U.S. EV production to ramp up starting in 2025 and accelerate in 2026 and 2027, driven by expanding charging infrastructure and falling average EV prices, and Rivian is seen as a strong player in this growth phase. Furthermore, Benchmark analysts' positive outlook also hinges on the automaker’s still rock-solid cash position, high-profile contracts with Amazon (AMZN) and Volkswagen, alongside RIVN’s expectation of posting a positive gross profit for the current quarter.
Overall, Wall Street appears optimistic about RIVN stock, maintaining a consensus rating of “Moderate Buy.” Of the 25 analysts offering recommendations, 11 advise a “Strong Buy,” one suggests a “Moderate Buy,” 12 advocate a “Hold,” and the remaining one analyst maintains a “Strong Sell.”
Rivian has already surpassed its average analyst price target. However, the Street-high price target of $25 suggests that RIVN could rally as much as 66% from here, making it a highly attractive pick for investors now.
