It’s hard going for EV companies right now. Despite beating Street estimates for Q1 vehicle deliveries, Rivian (NASDAQ:RIVN) shares fell in the subsequent session as it came short on production numbers.
Rivian delivered 13,588 units in the quarter, 9% above the consensus estimate of 12,415, amounting to a 71% year-over-year improvement but 3% below Q4’s numbers. Nevertheless, the figure still bettered the 10-15% sequential drop the company forecasted. Rivian also stuck to its production guide of 57,000 vehicles this year although Q1 production fell short of expectations; the company produced 13,980 vehicles in the quarter compared to the Street’s forecast of 14,200 units.
With the R2 unveil in early March now out of the way and production in Q2 and Q3 already known to be affected by factory downtime associated with re-rating production capacity, Baird analyst Ben Kallo expects the focus will now be on Rivian’s efforts to reduce costs which should help the company meet its target to reach a small gross profit per vehicle in 4Q24. For Kallo, the bull case rests on Rivian initiating production of the R2 in the Normal, Illinois plant rather than at its mooted Georgia factory, just as the company stated it will do at the R2 unveil.
“We view this as critical for RIVN’s target timeline of initial delivery in 1H26 and note that management estimates the decision will yield over $2B in cost savings. The introduction of a more complete product lineup should help RIVN with further financing,” Kallo said.
All in, Kallo remains a RIVN bull, reiterating an Outperform (i.e., Buy) rating and $23 price target, suggesting the shares will climb 114% higher over the one-year timeframe. (To watch Kallo’s track record, click here)
So, that’s the positive thesis. However, UBS analyst Joseph Spak takes the opposite view. Spak remains worried about the main issue plaguing the EV industry, and thinks the downtime at Rivian’s plant could put a spanner in the works, despite the company reaffirming its production outlook.
“We continue to have concerns over demand for R1 vehicles given the high price point,” Spak said. “Further, even though full-year production guidance was reiterated, we continue to see risk to the number given plant downtime and demand concerns.”
As such, Spak stays with the bears, maintaining a Sell rating while his $9 price target factors in downside of 16% over the coming months. (To watch Spak’s track record, click here)
Where does the rest of the Street stand, considering both the bull and the bear case? On balance, analysts lean positive, although not conclusively. The stock maintains a Moderate Buy consensus rating, based on 12 Buy recommendations, 9 Holds, and 3 Sells. The average price target, however, remains a wholly bullish one; at $17.67, the figure suggests shares will climb 65% higher over the one-year timeframe. (See Rivian stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
