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Has Rivian Stock Hit Bottom? Looking for the Silver Lining
Stock Analysis & Ideas

Has Rivian Stock Hit Bottom? Looking for the Silver Lining

Rivian (RIVN) went public last November and the market took the latest EV darling to heart immediately, sending shares soaring in the first few weeks of trading. But those halcyon times are no longer with us, and the new EV stalwart has paid the price for a big shift in sentiment.

In Rivian’s case, the stock has felt the impact from the selloff in growth but also due to other more company specific issues. These include over exuberant expectations, and production ramp and supplier problems.

The result is a stock which has shed 78% of its value since November’s peaks; those were attained only a few weeks following the company’s IPO.

There was no respite for the beaten-down stock last week either, following the release of 4Q21’s financial statement.

The company missed on both the top-and bottom-line, but more importantly, the startup is beset by supply chain snags which have led to a reduced outlook.

Semiconductors, wire harnesses and electronics bottlenecks were all behind the company slashing the production forecast for 2022 by half. Rivian now expects to deliver 25,000 vehicles this year. While this is roughly in line with RBC’s Joseph Spak’s recent forecast, the analyst believes the Street in general was looking for a figure somewhere in the low 30,000s region.

That said, the analyst does think the company might be taking the conservative route, providing “some cushion in the outlook.”

In any case, considering the long-term implications, Spak sees the issue as negligible and believes the company remains poised for success. However, investors might need to be stoic in the meantime.

“Truth is, a few thousand units shouldn’t make that much of a difference to the investment case,” the analyst said. “We understand that RIVN needs to show progress on the production ramp and rebuild investor confidence. This could take time and RIVN has a very ambitious plan. but we see a very favorable risk/reward at these levels for investors with patience.”

To this end, Spak sticks to his Outperform (i.e. Buy) rating on RIVN, although the price target is reduced from $116 to $100. Nevertheless, that new price target could still generate returns of a massive 170%. (To watch Spak’s track record, click here)

Most analysts remain in Rivian’s corner but not all in are on board. Based on 9 Buys vs. 5 Holds, the stock has a Moderate Buy consensus rating. However, the average price target remains an optimistic one; at $76.5, the figure suggests shares could rise by 107% over the coming year. (See RIVN stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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