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Rivian Automotive (NASDAQ:RIVN)) The stock is up 16% over the past two trading sessions, erasing nearly half of the losses suffered by the stock following its disastrous fourth-quarter earnings report in the second half. To recall, Rivian reported slightly better-than-expected sales last month, with slightly less severe losses than feared, after the company told investors that it expects to increase production of electric vehicles in 2024. When I mentioned that I would stabilize him, he was clearly unhappy. Since he produced only 57,000 EVs in 2023; Growing Its production rate is simply not there.
So how has Rivian bounced back from last month’s failure? By announcing not one, but two (and maybe even three) new EV models to hit the market over the next few years.
Goldman Sachs analyst Mark Delaney attended an event announcing Rivian’s new EVs, called the R2 and R3 (and R3X), respectively. But as Delaney has said, it’s his long-awaited R2 that investors will most immediately focus on (R3 was a surprise in some ways). So this time he will focus on R2.
Rivian will bring the R2 to market by producing the new electric SUV at its existing factory in Normal, Illinois, rather than waiting for a new factory to be built in Georgia first for this purpose. I explained how to do it. This strategic decision has two main effects:
First, by building in a factory that’s already built, Rivian will be able to start producing (and selling) EVs sooner than expected. Production of the R2 is scheduled to begin in the first half of 2026, rather than in the second half (as previously promised). This will make it easier for Rivian to get this vehicle into production before funding runs out.
Second, and related to the first, Rivian has decided to postpone construction of its Georgia plant for the time being, which will save cash and make it even more likely that its cash holdings will last from now until 2026. It will be certain. Georgia is still part of the state of Georgia. This is Rivian’s long-term plan and will be key to increasing production rates once R2 is introduced and sales begin. However, while the second plant is not being built, Rivian will be able to reduce capital expenditures by about $2.25 billion over the next few years.
Investors clearly liked the sound of all this, which is why they drove Rivian stock up so sharply, and Mr. Delaney seemed pleased as well. Delaney cited the R2’s distinctive appeals (faster acceleration, range comparable to most of its direct competitors, and a base price of $45,000, which is only about 60% of the price of Rivian’s existing R1 EV). etc.), we made the following hypothesis regarding the introduction of R2. He will likely “significantly expand Rivian’s overall addressable market” by a factor of four.
That said, Delaney sees all of the above as “incrementally positive for the stock,” which may already have been factored into Rivian’s stock given its recent surge. As a result, in the end, Mr. Delaney did not change his recommendation for Rivian’s stock, maintaining his Neutral rating and $13 price target, which implies an upside of less than 2% over the next 12 months.
This is Goldman Sachs’ view. Now let’s focus on the rest of the market. His 12 Buys, 9 Holds, and 3 Sells on RIVN combine for a Moderate Buy rating. There is significant upside potential (40% to be exact) if the average price target of $17.90 is achieved within the next 12 months. (look RIVN stock price prediction)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. Content is for informational purposes only. It is very important to perform your own analysis before making any investment.
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