It’s been hard to put a positive spin on Rivian’s (NASDAQ:RIVN) woeful year-to-date performance. Since 2024 entered the frame, the shares have bled to the tune of 63%.
It’s a far cry from only two and a half years ago or so, when Rivian entered the public markets and EVs were the hottest trend going. But along with the share price obliteration, sentiment has completely flipped since those heady days.
This is noted by Barclays analyst Dan Levy, who says, “as an EV pureplay RIVN has naturally been challenged by the rise of an EV Winter… with pressure from both market sentiment as well as discouraging developments around near-term demand.”
“A disappointing 2024 production guide (~flat y/y) during 4Q earnings added to the poor sentiment and left investors notably concerned on the path forward, particularly with looming capital needs,” Levy went on to add.
But credit where credit is due, and Rivian has reacted to the downturn by adjusting its strategy. In March, the company presented its revised product roadmap alongside the much-anticipated introduction of the R2 (and the unexpected debut of the R3 concept). The company said it would postpone the building of its new plant in Georgia and instead begin initial production of the R2 in Normal, Illinois, with plans for modest expansion there. This decision brings forward the start of R2 production to the first half of 2026, compared to the previous goal of the second half of 2026 in Georgia. But more importantly, says Levy, it provides a “critical deferral of capital outlays (guide to $2.25bn reduction in spend, inclusive of capex, product investments, and supplier costs) that relieves some of the pressure around the near-term need for incremental funding.”
Generally speaking, Levy supports this approach, believing the key aspect of the Rivian narrative lies in its capacity to “take costs out of R1.” Yet, the analyst acknowledges the inherent trade-offs involved. Specifically, deferring activities in Georgia extends the company’s timeline to achieve mass scale. Consequently, Levy anticipates that the defensive measures to curb cash burn will result in a more modest scale overall, at least until the decade’s end.
This translates to lower volumes, prompting Levy to adjust his RIVN price target from $12 to $10. Levy rates the stock an Equal Weight (i.e., Neutral), believing Rivian’s “long-term opportunity as a highly vertically integrated pure-play keeps the story compelling.” (To watch Levy’s track record, click here)
Levy’s objective appears to be on the conservative end of the spectrum; the average price target stands at $16.91, making room for one-year returns of ~96%. RIVN’s Moderate Buy consensus rating is based on a mix of 12 Buys, 8 Holds and 3 Sells. (See Rivian stock forecast)
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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.
