Rivian Automotive (Riven) was handed a price hike late Friday after its stock price soared nearly 13% last week on positive sentiment surrounding the EV startup’s R2 and R3 vehicle launch events. But with EV demand sluggish, there are questions about whether the company will be able to bring new product lines to market without support. RIVN stock soared on Monday.
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UBS on Friday raised its target price on Rivian stock to 9 from 8. However, UBS maintained a sell rating on the stock. The company noted that after Thursday’s product launch, “the narrative around Rivian has changed.”
UBS added that new product rollouts have diverted attention from weak demand for the older R1 vehicle line, and Rivian’s decision to halt construction of a new Georgia plant has extended its financing runway. However, the company still believes Rivian will need additional capital to bring these products to market.
RIVN stock rose 4.4% to 13.34 during market trading on Monday. Rivian stock rose 12.6% to 12.78 last week. Prior to Thursday’s product launch, Jefferies Group initiated coverage of Rivian stock with a buy rating and 16 price targets.
Rivian launches R2
The EV startup on Thursday announced R2, a smaller, cheaper next-generation vehicle and platform, with an estimated starting price of $45,000. Rivian expects the vehicle will also qualify for a $7,500 Inflation Control Act (IRA) tax credit.
The vehicle was to be produced at Rivian’s new plant in Georgia. But on Thursday, the company announced it would pause construction of the $5 billion factory and open an R2 production line at its Illinois plant. Production of the R2 platform is expected to begin in 2026, and deliveries are expected to begin in the first half of 2026.
Rivian also introduced the R3, a more compact crossover-style vehicle based on the R2 platform, and the high-performance R3X product. The company did not announce pricing or expected delivery dates for the R3 or R3X on Thursday. Rivian said R3 will be priced lower than R2 and R3X deliveries will begin after R2.
Within 24 hours of its launch, Rivian said the R2 had more than 68,000 reservations.
Analyst Adam Jonas rates Rivian stock
Morgan Stanley analyst Adam Jonas on Friday maintained RIVN’s Overweight rating with a price target of 14. Jonas wrote on Thursday that R3’s release “has stolen the show.” However, the analyst also expressed caution.
“While Rivian excited the market by announcing its new product pipeline for the next three years, investors may also want to consider the potential risks of presenting too much information,” Jonas said. .
Potentially just as important as the new products is the decision to pause plans for a Georgia factory, which should save about $2.25 billion in capital expenditures, the analyst said. added. But Jonas also wrote that he doesn’t believe Rivian will be able to bring new products to market on its own.
“We believe that significantly greater capital resources may be required for the company to confidently commercialize its R2 and R3 model plans,” he said.
Jonas said his “key question” is whether Rivian should “look for a new strategic ‘sponsor’ before embarking on the ‘heavy lifting’ stage of development, or continue ‘on its own’ and wait for a later stage.” “Is there any possibility of finding a partner?” ”
In Jonas’ view, Rivian could “benefit” from the partnership by bringing R2 and R3 to market at scale.
Rivian stock falls on fourth-quarter profit and funding concerns
RIVN stock has been hovering near record lows since plunging more than 25% on February 22 following the company’s fourth-quarter earnings report. At the time, the company also announced job cuts and plans to keep production in 2024 flat compared to 2023.
Rivian reported on Feb. 21 that it posted a loss of $1.36 per share in the fourth quarter, with revenue doubling to $1.31 billion. Wall Street had expected a loss of $1.35 per share on total revenue of $1.28 billion. Rivian said it expects production of 57,000 vehicles for 2024, flat with 2023. The EV startup also predicts low-single-digit growth in consumer and commercial vehicle deliveries in 2024.
The company expects vehicle deliveries in the first quarter of 2024 to be approximately 10-15% lower than in the fourth quarter of 2023, and announced that it will lay off 10% of its salaried employees.
tesla (TSLA) CEO Elon Musk posted on X (formerly Twitter) late on February 21 that based on Rivian’s quarterly cash reserves, the company could go bankrupt within about six quarters. did.
Chief Financial Officer Claire McDonough told investors during the fourth quarter earnings call that Rivian “remains confident that our cash, cash equivalents and short-term investments will fund our operations through 2025. “I’m working on it,” he said.
“We continue to improve cost efficiencies and improve vehicle unit economics to maintain our strong balance sheet position while taking advantage of the various capital markets available to Rivian across our capital structure,” said McDonough. We aim to evaluate the
Rivian stock ranks 9th on IBD Automobile manufacturer industry association. RIVN’s overall rating is 26 out of 99. Additionally, the stock has a Relative Strength Rating of 10 and an EPS Rating of 41 out of 99.
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