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After a blockbuster initial public offering (IPO) in 2021, electric vehicle (EV) specialist Rivian Automotive (RIVN) shares are down 93% from all-time highs, valuing the company at $10.9 billion by market cap. Let’s see if Rivian stock can stage a comeback in 2024 and how high it can go, according to consensus estimates.
An Overview of Rivian Automotive
Rivian Automotive (RIVN) designs, develops, manufactures, and sells electric vehicles (EVs) and accessories. It offers consumer vehicles, including a two-row, five-passenger pickup truck under the R1T brand and a three-row, seven-passenger sports utility vehicle under the R1S name.
The R1T is a premium battery-powered EV pickup truck priced at roughly $100,000. Despite its high price point, the truck has experienced steady demand, given its initial sales numbers. Rivian’s R1S is the company’s best-selling vehicle, and is priced at $70,000. Further, Rivian also manufactures commercial vans, and signed a big-ticket deal with Amazon (AMZN) to supply the tech giant with 100,000 vehicles through 2030.
Rivian will focus on expanding its product portfolio and launching affordable vehicles in the future. It recently announced the launch of the R2 SUV, which will be priced at $45,000 and enter production in the next two years.
Rivian May Burn Out of Cash
In the last 15 months, the EV market has been wrestling with sluggish consumer demand due to headwinds such as inflation and rising interest rates. Rivian reported vehicle deliveries of 14,000 in Q4 of 2023, down from 15,500 in Q3, which suggests demand for premium EVs has hit a peak.
Additionally, in the last 12 months, Rivian has burned $6 billion in free cash flow, and ended 2024 with $9 billion in cash. So, Rivian has just 18 months of runway left, if it continues to experience an outflow of $6 billion a year.
Rivian will be forced to raise equity capital in the next 12 months, which would dilute shareholder wealth and pressure its share prices. Typically, vehicle manufacturers have to invest heavily to ramp up manufacturing capabilities before they benefit from economies of scale and churn out consistent profits.
Piper Sandler Is Bullish on Rivian Stock
Earlier this month, investment bank Piper Sandler upgraded Rivian stock to a “buy” rating from a “hold” rating. The brokerage firm also raised its price target on RIVN stock from $15 to $21 per share, indicating an upside potential of almost 100% from current levels.
According to Piper Sandler, Rivian’s second-generation mid-sized SUV, priced at $40,000, should experience robust demand in the second half of this decade. The investment bank explained that Rivian will build the lower-priced SUV at its existing plant located in Illinois, allowing it to delay the construction at the Georgia facility - a move expected to result in savings of over $2 billion.
What Is the Target Price for RIVN Stock?
Analysts tracking Rivian stock expect sales to rise by just 8.8% year-over-year to $4.82 billion in 2024. However, top-line growth is forecast to accelerate to 56%, touching $7.5 billion in 2025.
Priced at less than three times 2024 sales, Rivian stock might seem cheap. But as long as the company remains unprofitable, it will remain a high-risk investment choice.
Out of the 24 analysts covering RIVN stock, 13 recommend “strong buy,” two recommend “moderate buy,” seven recommend “hold,” and two recommend “strong sell.” The average target price for RIVN is $19.30, which is 78% higher than Friday's closing price.
