EV startup Rivian (NASDAQ:RIVN) is hoping to emulate Tesla’s success. That hasn’t happened yet, but in one respect the company has matched Tesla already. As with the EV leader’s 2022 targets, Rivian also failed to come up with the goods.
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It should be noted, however, that Rivian’s miss wasn’t quite as severe as Tesla’s. The company produced 24,337 vehicles last year, falling short of its 25,000-unit target. That objective was already halved from the original target of 50,000 units earlier in 2022 as the company struggled with various production issues. Deliveries throughout the year reached 20,332. In Q4, Rivian produced 10,020 vehicles and delivered 8,054.
Investors should not get too down on account of the soft showing, says Morgan Stanley’s Adam Jonas.
“While a miss, we are encouraged by RIVN’s ramp this year,” the analyst said. “For a year that started tough with a cut to IPO production and delivery estimates, RIVN managed to increase both production and deliveries Q/Q throughout the year, with 4Q deliveries over 550% higher than that of 1Q. We expect to see RIVN continue to scale production next year, and maintain our FY23 delivery estimate of 50k vehicles.”
The focus now turns to the fourth-quarter earnings, where all eyes will be on the gross margin and cash burn so to “re-assess the trade-offs of a strong product/attractive valuation and potential dilution risks.”
For the company to come good on its growth targets, Jonas notes that Rivian will need to raise additional capital at some point. The question is when and what kind of macro environment we will be in at that point. According to Jonas’ calculations, Rivian can make it through FY23 and most of FY24 without any cash injections. However, at the same time, there is no guarantee the “macro situation” will get any better by then.
All told, Jonas remains a fully-fledged RIVN bull, reiterating an Overweight (i.e., Buy) rating on the stock, backed by a $55 price target. Should the figure be met, investors will be sitting on returns of a hefty 231% a year from now. (To watch Jonas’ track record, click here)
All in all, this EV firm has picked up 18 recent analyst reviews, including 12 Buys, 4 Holds, and 2 Sells, giving it a Moderate Buy consensus rating. The stock’s average price target of $39.47 suggests a one-year upside of ~138% from the current share price of $16.60. (See RIVN stock forecast 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.
