Last week was not a good week for Rivian (NASDAQ:RIVN). The shares shed 38% throughout the week, with the majority peeling off in the wake of the EV maker’s Q4 print.
The results showed a bigger loss than expected, but more importantly, it was about what’s to come next that really had investors heading to the exit gates. Not only are the losses expected to continue at a more drastic rate than previously anticipated in 2024, but also production levels will be far below those expected beforehand on Wall Street. Specifically, factoring in the impact of downtime for factory upgrades, the company expects to produce 57,000 vehicles in 2024, roughly the same amount as last year, but much less than the 80,000 units consensus was after.
There’s a generally accepted notion on Wall Street that Rivian is a good company with excellent products and a good chance of becoming a major EV player over the long-term. The problem, as Truist analyst Jordan Levy notes, is that more in the here and now, there are lots of issues to deal with and not much for investors to get excited about.
“Looking ahead to 2024,” says the analyst, “with the production guidance coming in to the downside, we expect limited catalysts for RIVN over the next 12 months to drive sustained momentum back into the name.”
The lack of catalysts is not entirely true. On March 7th, there will be the official unveiling of Rivian’s next-gen R2 platform. The car is expected to go for between $45k – $50k and be of a similar size to Tesla’s Model Y.
The issue, however, is that the first shipments out of its under-construction Georgia facility are only expected in 2026. And that’s quite a while away with Rivian most likely both burning and needing more cash between now and then.
“While the R2 platform announcement is an important step in RIVN reaching a broader domestic/ international customer base, given first production is still two years out we expect capital needs/cash burn to drive the narrative for the coming quarters,” Levy opined. “We ultimately believe concrete evidence of pushing GM+/strength in initial R2 orders will be needed to bring optimism back to shares.”
As such, Levy downgraded his RIVN rating from Buy to Hold and slashed his price target in a big way, from the prior $26 to $11. (To watch Levy’s track record, click here)
The rest of the Street has a far more optimistic outlook where the share price is concerned; going by the $20.39 average price target, Rivian shares will change hands for ~90% premium a year from now. Overall, the stock has a Moderate Buy consensus rating, based on 11 Buys, 8 Holds and 1 Sell. (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.
