Try as you might, it has been hard to put a positive spin on the state of the EV industry in recent times. The issues are well-known by now – demand has cooled against a backdrop of a high-interest rate environment, economic uncertainty and intense competition.
While even the biggest names in the space such as Tesla have been affected, the going has been particularly tough for the smaller companies attempting to navigate this terrain. Ones such as Rivian (NASDAQ:RIVN). The stock has been hit badly by the downturn, showing year-to-date losses of a bludgeoning 61%.
The question right now is whether Rivian is doomed to be another failed startup, or might this be an opportunity to buy one of the promising EV names out there at rock bottom prices?
Bluesea Research, a 5-star investor, falls squarely in the latter camp, believing there are silver linings here. Bluesea notes Rivian has a “few aces up its sleeves and a successful strategy can help improve the stock trajectory.”
Highlighting recent developments, Bluesea mentions Rivian’s workforce restructuring, foreseeing a boost in gross margins. Anticipation is high for the forthcoming quarterly earnings, expected to reflect the benefits of these strategic moves.
Moreover, Bluesea points out the favorable reception of Rivian’s latest R2 model, evident from robust booking orders. In addition, Rivian’s concerted efforts towards enhancing profitability through refining its supply chain and identifying production cost efficiencies are noteworthy.
Looking at the financial situation, with Rivian boasting cash reserves exceeding $9.4 billion as of last year’s conclusion, Bluesea asserts that the company possesses ample financial flexibility to navigate until the end of 2026.
Closer to the here and now, Rivian has also set its sights on reaching breakeven on the gross profit front by the end of this year. This will represent an “important milestone” for the company because decreasing the cash burn rate could lead to increased confidence in the company’s long-term prospects.
On a less tangible but more sentiment-based take, given Elon Musk’s controversial nature and his potential to alienate certain consumers, the investor thinks consumers may opt for other EV options, so Rivian could also prove to be a “good hedge against Tesla.”
All told, then, Bluesea Research rates RIVN shares a Buy. (To watch Bluesea Research’s track record, click here)
Buy ratings also seem to be the most popular view on Wall Street although not all are convinced. RIVN stock claims a Moderate Buy consensus rating based on a mix of 12 Buys, 8 Holds and 3 Sells. Most also appear to think the shares are indeed undervalued; at $16.91, the average target factors in one-year returns of a robust 84%. (See Rivian stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
