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On Thursday, Piper Sandler adjusted its stance on Rivian Automotive Inc (NASDAQ:RIVN), downgrading the electric vehicle manufacturer’s stock rating from Overweight to Neutral and reducing the price target to $13 from $19. Trading at $11.36 with a market capitalization of $12.8 billion, Rivian’s stock has declined about 15% year-to-date. According to InvestingPro data, analyst targets range from $6.10 to $23, reflecting mixed sentiment about the company’s prospects. The firm’s analyst cited several reasons for the revision, including the challenge of identifying growth catalysts for Rivian in the year 2025, despite acknowledging the company’s strategic strengths.
The analyst expressed appreciation for Rivian’s approach, particularly its self-reliance in electronics and software. Additionally, the recent joint venture with Volkswagen (ETR:VOWG_p) was noted as a positive move that helped de-risk Rivian’s balance sheet and validate its strategy. InvestingPro analysis shows that Rivian maintains a strong current ratio of 4.7 and holds more cash than debt on its balance sheet, though it’s quickly burning through its cash reserves. Encouraging signs were also seen in Rivian’s cost of goods sold per unit, which saw a significant year-over-year reduction in the fourth quarter of 2024 compared to the same quarter in 2023.
Despite these favorable aspects, Piper Sandler highlighted concerns over Rivian’s potential growth drivers in the near term. The firm pointed out that while Rivian has minimal growth prospects and significant operational challenges ahead, investors might expect new developments such as the R2 launch and possible joint venture customer wins in 2026. InvestingPro data reveals concerning fundamentals, with a gross profit margin of -24.14% and revenue growth forecast of just 7% for FY2025. For deeper insights into Rivian’s financial health and growth prospects, subscribers can access the comprehensive Pro Research Report, which provides detailed analysis of over 1,400 US stocks.
The analyst also warned of policy risks that could impact Rivian in 2025, referring to it as a potential "triple-whammy". The revised discounted cash flow (DCF)-based price target reflects these concerns, with dilution and an increased weighted average cost of capital (WACC) factoring into the new valuation. The equity from Volkswagen’s investment increased Rivian’s share count and reduced debt in the capital structure. Based on InvestingPro’s Fair Value analysis, Rivian appears fairly valued at current levels, with a beta of 2.04 indicating significant volatility. Consequently, Piper Sandler is now applying a WACC of 14.4%, up from the previous 13.5%.
In other recent news, Rivian Automotive Inc reported adjustments to its vehicle delivery forecast for the first quarter, now expecting 8,000 deliveries due to seasonal effects and constrained demand, while maintaining its full-year projection of 46,000 to 51,000 deliveries. Analysts from Benchmark and Stifel have maintained their Buy ratings on Rivian, with price targets of $18 and $16, respectively, reflecting confidence in the company’s long-term growth despite near-term challenges. Stifel highlighted Rivian’s progress toward achieving a positive gross profit by the end of 2024 and the importance of the upcoming R2 platform launch. Meanwhile, Bernstein analysts reiterated an Underperform rating with a $6.10 target, citing concerns over Rivian’s ability to achieve sufficient scale in the growing BEV market.
Rivian has also announced a strategic shutdown of its Normal, Illinois manufacturing facility to prepare for the R2 platform launch expected in 2026. The company recently appointed Sreela Venkataratnam as Chief Accounting Officer, bringing experience from her previous role at Tesla (NASDAQ:TSLA) to oversee Rivian’s financial operations. This appointment comes as Rivian achieved a positive gross profit in the last quarter, signaling progress in its financial strategy. These developments occur amid broader industry challenges, including a slowdown in the U.S. automotive sector and ongoing trade policy uncertainties.
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