The stock market has been the bearer of mostly bad news in 2022. Investors are pinning their hopes on a turnaround, and no doubt those backing Rivian (RIVN) are too. Shares of the EV startup have taken a pummeling year-to-date, although there finally might be evidence a reversal of fortune is in the cards.
The company has been beset by issues ranging from chip shortages to Covid-related headwinds to the rearranging of vehicle lines. All have served to impact production but have also caused investors to lose trust in the Rivian story.
But the company offered an olive branch to disgruntled investors when it reported Q1’s financials last week. Rivian reiterated its goal to produce 25,000 vehicles this year and noted the strong demand – there are now more than 90,000 orders for its vehicles, up from 83,000 as of the latest update in March.
“Most importantly,” says Deutsche Bank analyst Emmanuel Rosner, “Rivian indeed presented its modified strategy to optimize its product roadmap, associated operating expenses, and capex spending, to ensure a path to the R2 launch in Georgia with its $17bn cash on hand, without the need for additional capital.”
Between 2023 and 2025, Rosner now expects capex spending per year will be in the $2 billion+ range, meaningfully below the prior $3 billion-$3.5 billion range. According to the analyst, this should leave enough cash to take care of Rivian’s needs through 2024 and until the company is positive free cash flow, per management’s forecast.
Investors will no doubt welcome the “encouraging operational traction” and the company making “thoughtful updates to capital allocation.” However, over the near term, and given the expiration of the lockup period for around 80% of the company’s shares, Rosner thinks the stock “could remain under technical pressure.”
But taking the long-term view, Rosner remains upbeat. “We continue to believe the company offers attractive product and a well-thought-out business plan to become a large EV player, with unique characteristics in both hardware and software,” the analyst summed up.
As such, Rosner reiterated a Buy rating on RIVN shares, although the price target is lowered from $90 to $69. Still, there’s upside of 157% from current levels. (To watch Rosner’s track record, click here)
The Street’s average target also remains a bullish one; at $52.38, the figure makes room for one-year returns of ~95%. Overall, the ratings are mixed yet favor the bulls; based on 9 Buys vs. 6 Holds, the stock claims a Moderate Buy consensus rating. (See Rivian stock forecast on TipRanks)
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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.
