Rivian Automotive (NASDAQ:RIVN) certainly isn’t the most famous or well-capitalized electric vehicle (EV) maker. Yet, I believe Rivian’s shareholders should stay on track and be patient. I am bullish on RIVN stock, but only for the long term, as Rivian’s road to recovery will take some time.
Headquartered in California, Rivian Automotive manufactures EVs, including electric commercial delivery vans. Believe it or not, Tesla (NASDAQ:TSLA) CEO Elon Musk predicted last year that Rivian would go bankrupt.
Of course, Musk’s dire prediction about Rivian should be taken with a grain of salt. After all, he’s the head of a competing EV manufacturer. Still, Rivian has had its fair share of challenges, but a fresh round of data indicates that the automaker is doing better than the experts had anticipated.
Rivian Looks Beyond Amazon Partnership
In the history of the company’s existence, Rivian’s biggest win is probably a collaboration with e-commerce and product delivery giant Amazon (NASDAQ:AMZN). What could possibly be better for Rivian than an agreement to manufacture electric commercial delivery vans for Amazon?
Just that deal, by itself, could sustain Rivian for a long time. On the other hand, it’s understandable if Rivian’s management doesn’t want to be limited by its Amazon partnership.
Thus, it makes sense that Rivian is now allowing companies other than Amazon to purchase the automaker’s custom-designed Rivian Commercial Van. To quote Rivian Automotive CEO RJ Scaringe, “We’re excited to open sales of our electric commercial van to more businesses.”
Don’t get the wrong idea here. Scaringe and Rivian will still work closely with Amazon. “Amazon is, and will remain, a key partner for us,” the Rivian CEO assured.
In other words, Rivian Automotive will still help Amazon achieve its goal of decarbonizing last-mile package delivery, yet the automaker can also generate revenue by selling the Rivian Commercial Van to other businesses. You must agree; it’s just great news all around for Rivian.
Rivian Ramps Up Its EV Production Target
Speaking of great news, Rivian recently published its shareholder letter for 2023’s third quarter. Perhaps the best part of the letter is the disclosure that Rivian is raising its full-year 2023 EV production outlook.
Previously, Rivian had guided for production of 52,000 units. Now, the company expects to produce 54,000 units for the year. Rivian’s management cited “the progress experienced on [its] production lines, the ramp of [its] in-house motor line, and the supply chain outlook” as reasons for the raised EV production guidance.
That’s not the only positive news. Rivian also improved its adjusted EBITDA guidance, citing “progress on cost management” while also lowering the company’s capital expenditures (CapEx) guidance.
What about Rivian’s third-quarter 2023 performance, though? No worries there, as the company produced 16,304 EVs, a quarterly record for the company. Plus, that figure demonstrated excellent progress compared to the production of 13,992 vehicles in the second quarter and only 7,363 units in 2022’s third quarter.
Musk would probably scoff at those production figures. However, Tesla also had to grow its operations over time. Currently, I believe there’s no reason to assume that Rivian Automotive will go bankrupt.
Getting back to the Q3-2023 results, Rivian reported revenue of $1.34 billion, beating the consensus estimate of $1.31 billion. Meanwhile, Rivian posted a quarterly per-share loss of $1.19. This is certainly better than Wall Street’s consensus forecast that Rivian would lose $1.34 per share in the third quarter, and it’s also better than last year’s loss of $1.57 per share.
It might bother some investors that Rivian Automotive is still a money-losing business. Musk would certainly point this fact out, but let’s not be too harsh. Improvement, not perfection, is the name of the game. That’s why patience is essential if you’re going to invest in RIVN stock.
Is RIVN Stock a Buy, According to Analysts?
On TipRanks, RIVN comes in as a Moderate Buy based on 12 Buys, seven Holds, and one Sell rating assigned by analysts in the past three months. The average Rivian Automotive stock price target is $26.11, implying 54.5% upside potential.
Conclusion: Should You Consider RIVN Stock?
There’s definitely a degree of risk if you’re going to invest in Rivian stock. The company isn’t profitable at the moment, but at least Rivian is doing better than the analyst community had anticipated.
It’s also notable that Rivian Automotive is raising its vehicle production outlook. This suggests that Rivian’s management is confident about the automaker’s future prospects. Therefore, if you don’t mind taking a chance on a still-growing EV startup, feel free to consider RIVN stock.
