On Thursday, CFRA made a significant adjustment to its stance on Rivian (NASDAQ:RIVN) Automotive Inc (NASDAQ: RIVN), downgrading the electric vehicle maker's stock from Hold to Sell. The firm also halved Rivian's price target, bringing it down to $10 from the previous estimate of $20.
The downgrade came after Rivian reported its fourth-quarter earnings, which showed an adjusted EPS of -$1.36, falling short of the -$1.32 consensus. This miss was attributed to higher-than-expected costs. Despite this, the company's revenue of $1.32 billion exceeded expectations by $60 million.
Rivian has also provided its full-year production and EBITDA guidance, aiming for 57,000 units and an EBITDA loss of -$2.7 billion, respectively. This guidance is slightly more optimistic than the current consensus of a -$2.6 billion EBITDA loss, and it indicates a marginal decrease from the 57,232 vehicles produced in 2023.
The company concluded the year 2023 with a cash and short-term investments balance of $9.4 billion, a decrease from $11.6 billion at the end of the previous year. CFRA's revised outlook reflects skepticism towards Rivian's ability to significantly reduce its EBITDA loss by approximately $1.4 billion this year, especially with projected lower vehicle production volumes.
CFRA's critical view of Rivian's financial future is based on the premise that the company's adjusted EBITDA guidance is overly optimistic. The analysis suggests that Rivian's hopes to cut its EBITDA loss from 2023's figures are not grounded in the reality of the current demand for its vehicles.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.