On Tuesday, DA Davidson revised its stock price target for Rivian Automotive Inc (NASDAQ:RIVN), reducing it to $12.00 from the previous $13.00 while keeping a Neutral rating on the stock. The adjustment follows the company's third-quarter earnings for the year 2024, which highlighted several challenges, including a persistent supply-chain issue that impacted motor production and has extended into the fourth quarter.
Rivian's earnings report indicated a strategic shift in production, with a temporary focus on the Electric Delivery Van (EDV) due to the motor supply constraints. Despite these setbacks, Rivian expressed optimism about the introduction of new R1 vehicle variants, such as the Tri Motor, slated for release next year.
The analyst from DA Davidson noted that there has been no alteration to the timeline for the R2 model, with its launch still scheduled for 2026. However, the current market conditions make it difficult to endorse the stock.
The analyst cited growing competition in the electric vehicle (EV) sector and the lack of clarity surrounding Rivian's deal with Volkswagen (ETR:VOWG_p) (VW), particularly regarding potential dilution, interest costs, and other financial details, as reasons for caution.
Rivian's recent earnings report and subsequent stock rating update reflect the broader challenges facing the EV industry, including supply chain disruptions and increased market competition.
In other recent news, Rivian Automotive Inc has witnessed significant events affecting its financial trajectory. The electric vehicle manufacturer reported lower than expected earnings for the recent quarter, with revenues at $874 million against a consensus estimate of $982 million.
Despite challenges, Rivian produced 13,200 vehicles and delivered around 10,000 units. Following this, Mizuho (NYSE:MFG) and Stifel, two investment firms, revised their price targets for Rivian, with Mizuho reducing it to $11.00 and Stifel to $16.00, while both firms maintained their respective Neutral and Buy ratings.
Rivian confirmed a revised full-year 2024 production forecast of approximately 48,000 vehicles, representing a 17% year-over-year decrease. However, the company anticipates delivery growth in the low single-digit percentage range year-over-year.
Rivian also aims for a positive gross margin by the fourth quarter of 2024, supported by strategies like expedited depreciation of equipment, reductions in material costs, and increased revenue per vehicle.
Moreover, Rivian managed to decrease its cash burn by 8% year-over-year, attributed to lower delivery numbers and parts shortages. The company also secured a supply of 4,695 cylindrical batteries from LG for its upcoming R2 model. These recent developments highlight Rivian's resilience and potential for growth despite ongoing challenges.
InvestingPro Insights
Recent InvestingPro data provides additional context to Rivian's current situation. The company's market capitalization stands at $11.27 billion, reflecting investor sentiment amidst the challenges outlined in the article. Rivian's revenue for the last twelve months as of Q3 2024 reached $4.55 billion, with a notable revenue growth of 20.33% over the same period. However, this growth is tempered by a concerning quarterly revenue decline of 34.63% in Q3 2024, aligning with the supply chain issues mentioned in the article.
InvestingPro Tips highlight both strengths and weaknesses in Rivian's financial position. On the positive side, Rivian "holds more cash than debt on its balance sheet," which could provide a buffer as the company navigates through its production challenges. Moreover, "8 analysts have revised their earnings upwards for the upcoming period," suggesting some optimism about the company's near-term prospects despite the current headwinds.
However, the tips also point out that Rivian is "quickly burning through cash" and "suffers from weak gross profit margins," which is evident in the reported gross profit margin of -43.42% for the last twelve months. These factors underscore the financial pressures Rivian faces as it strives to ramp up production and introduce new vehicle variants.
For investors seeking a more comprehensive analysis, InvestingPro offers 10 additional tips that could provide deeper insights into Rivian's financial health and market position.
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