Rivian stock target cut to $18, maintains buy rating post Q2 results

Published 07/08/2024, 12:32
© Reuters

On Wednesday, Needham, a financial services firm, adjusted its price target for Rivian (NASDAQ:RIVN) Automotive Inc (NASDAQ:RIVN), a manufacturer of electric vehicles. The new price target is set at $18.00, down from the previous $20.00, while the firm continues to endorse the stock with a Buy rating. The revision follows Rivian's second-quarter results and subsequent company commentary.

Needham's stance remains positive on Rivian's prospects in the electric vehicle market, citing several factors that contribute to the company's potential for long-term success. High owner satisfaction with Rivian's R1 model and the partnership with Amazon (NASDAQ:AMZN) for the delivery of electric vans are seen as key drivers of demand.

Additionally, the recent strategic partnership with Volkswagen (ETR:VOWG_p) and planned investments are expected to enhance manufacturing efficiencies and reduce the cost of goods sold (COGS) per vehicle.

The firm's analysis suggests that Rivian's upcoming R2 and R3 models will play a significant role in driving unit growth and pushing out potential upside. However, uncertainty in the near-term demand for the R1 model is believed to be a factor in tempering immediate growth expectations.

Rivian's confirmation of delivery growth targets for 2024 and planned production capacity for the R1 and Electric Delivery Van (EDV) lines in 2025 have prompted the need to possibly adjust consensus delivery estimates downwards.

Needham's revised price target of $18.00 is based on a 20 times multiple of the firm's projected adjusted EBITDA for the year 2028, which has been discounted back to present value. Despite the lowered price target, the Buy rating indicates a continued confidence in Rivian's market position and growth trajectory in the transition from internal combustion engines to electric vehicles.

In other recent news, the company reported a less-than-expected gross margin loss in the second quarter of 2024, with an improved margin of negative 39%, according to Cantor Fitzgerald.

Rivian's management further confirmed its goal to reach positive gross margins by the end of 2024. The company also managed to reduce its gross loss per vehicle delivered, indicating financial resilience.

In addition, Rivian recently announced a joint venture with Volkswagen, a partnership that received approval from the German competition authority, Bundeskartellamt. The collaboration is set to bolster both companies' presence in the electric vehicle market, combining Volkswagen's extensive automotive experience with Rivian's innovative approach.

Furthermore, Rivian announced a significant executive shift with Dr. Kjell Gruner stepping down as the Chief Commercial Officer and President of Business Growth. Dagan Mishoulam is set to take over as Senior Vice President, Commercial.

In the legal sphere, Rivian is set to face trial over accusations of trade secret theft from Tesla (NASDAQ:TSLA) Inc., a case that has been ongoing since 2020. The trial's outcome will likely shed more light on the validity of Tesla's claims.

These recent developments highlight Rivian's continuous efforts towards financial stability, corporate growth, and industry collaboration, despite facing legal challenges.

InvestingPro Insights

As Rivian Automotive Inc (NASDAQ:RIVN) navigates the competitive landscape of the electric vehicle market, real-time data and insights from InvestingPro provide a clearer picture of the company's financial health and market performance. Rivian holds a market capitalization of $14.73 billion, reflecting its position in the industry. Despite the challenges, Rivian's revenue growth is notable, with a significant increase of 68.2% over the last twelve months as of Q2 2024. However, the company's gross profit margin stands at -41.1%, indicating that Rivian is currently not generating a profit from its revenues.

InvestingPro Tips highlight that Rivian has more cash than debt on its balance sheet, which is a positive sign for financial stability. Yet, the company is quickly burning through cash, which is a concern for investors. Additionally, the stock is known for its volatility, with a 44.39% return over the last three months, but also a 39.04% decline over the past year, showcasing the stock's fluctuating nature.

For investors seeking a deeper dive into Rivian's financials and future prospects, InvestingPro offers a comprehensive list of tips. For instance, out of the additional 12 InvestingPro Tips available, analysts have recently revised their earnings estimates downwards for the upcoming period, and they do not anticipate the company will be profitable this year. This information, coupled with the latest metrics, can help investors make more informed decisions. To explore these insights further, visit: https://www.investing.com/pro/RIVN

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2025 - Fusion Media Limited. All Rights Reserved.