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Despite growing demand and significant strides in technology, the electric vehicle industry has faced challenges ranging from supply chain constraints to intensifying competition. Yet, some players have managed to stand out, with Rivian Automotive (RIVN) one startup that has captured attention.
On Jan. 3, Rivian became a market darling - albeit briefly - after its fourth-quarter delivery numbers outpaced expectations, signaling operational improvements. Yet, despite this positive development, analysts from brokerage firms like CFRA remain cautious, citing concerns about profitability and cash burn.
So, with Rivian’s promise clashing against its challenges, is the stock poised for a turnaround, or is caution still warranted?
About Rivian Stock
Based in California with a $14.5 billion market cap, Rivian Automotive (RIVN) has carved its niche in the EV space with rugged, adventure-ready electric SUVs and trucks.
RIVN stock has been caught in a fierce tug-of-war between bulls and bears this past year. Though still a long way from its 2021 and 2022 peaks, down 27% over the past 52 weeks, the stock has managed to stay above April's low of $8.26 and has gained a solid 35.7% over the last three months. The latest win went to the optimists last week, with a 24.4% surge following strong Q4 production and deliveries.
RIVN stock is priced at a compelling 3.09 times sales, undercutting its auto industry peer Lucid Group (LCID) and its own historical average. For valuation hawks, this EV player might be a hidden gem waiting to shine.
Rivian Smashes Q4 Delivery Goals
Rivian ended 2024 on a high note, outpacing Wall Street’s expectations with Q4 deliveries. The EV pioneer produced 12,727 vehicles, beating estimates, although down 27% from 17,541 vehicles produced in the year-ago quarter. In total, Rivian built 49,476 EVs in 2024, slightly above its 47,000 to 49,000 guidance.
Deliveries hit 14,183, topping forecasts of 13,500 and capping fiscal 2024 at 51,579 EV units - within its guidance range of 50,500 to 52,000 units and edging past 2023's tally of 50,122.
Notably, Rivian’s production and delivery surged over 40% quarter-over-quarter, marking its strongest quarter of 2024. This momentum signals a significant milestone - Rivian’s supply chain woes are officially behind it. The key bottleneck - a shared component for R1 and RCV platforms - no longer limits production, paving the way for accelerated growth in 2025.
Cost-cutting efforts, including supplier renegotiations and manufacturing optimizations, are expected to bolster Q4 gross margins, easing investor concerns. With a $5.8 billion investment from German automaker Volkswagen (VWAGY) supporting its tech ambitions, Rivian appears primed to accelerate its electrifying journey.
Rivian's Q3 Earnings Missed Estimates
Rivian’s fiscal Q3 earnings, released on Nov. 7, showed the EV maker struggling with the fallout of production hiccups and supply chain woes. Revenue plunged 34.6% year over year to $874 million, while the net loss narrowed to $1.03 per share — still missing Wall Street’s estimates.
The real pain came from production and deliveries. Rivian produced just 13,157 units, a significant dip from 16,304 last year due to a shortage of a key part for its Enduro motor. Deliveries plummeted 35.6%, totaling only 10,018 units, reflecting tough times in a competitive EV market.
Rivian, after delivering underwhelming results, revised its fiscal 2024 adjusted EBITDA outlook, bracing for losses between $2.83 billion and $2.88 billion. As the EV maker is expected to unveil its Q4 earnings next month, analysts forecast a 48.1% year-over-year reduction in losses to $0.82 per share.
For fiscal 2024, losses are expected to narrow by 18.1% annually to $4.71 per share, with a sharper 32.5% drop to $3.18 per share loss in fiscal 2025. Rivian’s road to profitability seems arduous but not out of reach.
What Do Analysts Expect for Rivian Stock?
CFRA made some key moves on Rivian after its Q4 deliveries report last Friday. Analyst Garrett Nelson bumped up his target price to $8 per share, a 60% increase from his previous $5 estimate. Despite this, he is sticking with a "Sell" recommendation, noting the target is still 44% below the current share price.
Nelson also fine-tuned Rivian’s adjusted loss per share estimate for 2024 to $4.35, slightly better than his previous $4.40 forecast, but left the 2025 outlook unchanged at a loss of $3.30 per share.
While the latest deliveries and production numbers exceeded expectations, Nelson raised concerns about Rivian’s ability to achieve positive gross margins and its still-high cash burn rates. In short, while Rivian’s progress is notable, the analyst remains cautious about Rivian’s ability to deliver consistent profitability in the future.
The automaker's stock carries cautious optimism, having a consensus rating of “Moderate Buy.” Of the 25 analysts covering the stock, 10 rate it as a “Strong Buy,” one advises a “Moderate Buy,” 13 suggest a “Hold,” while the remaining one recommends a “Strong Sell.”
While the average analyst price target of $15.08 implies upside potential of 6.1%, the Street-high target of $25 suggests that RIVN stock could rally as much as 75.9%.
Rivian’s Q4 deliveries reflect promising momentum, yet the path forward is fraught with challenges. Scaling production in the auto industry is an intricate and capital-intensive undertaking, with even seasoned giants grappling to turn consistent profits. Rivian must still prove its ability to scale operations sustainably and achieve financial viability.
Compounding the uncertainty, policy shifts under incoming President Donald Trump’s administration, which may withdraw support for EVs and charging infrastructure, cast a shadow over the sector’s prospects. For now, prudence may be an investor’s best ally.
