Wall Street sets Rivian stock price for the next 12 months

Rivian Automotive (RIVN) has swiftly garnered attention in the electric vehicle (EV) market, despite a 51% drop from its 52-week high. 

Wall Street maintains a bullish outlook on Rivian’s long-term potential, esteeming the company’s production ramp-up, sales boost, and robust balance sheet. 

Rivian, known for its R1T pickup trucks and R1S electric SUVs, is actively competing with EV giant Tesla (TSLA) in shaping a sustainable automotive future. 

In Q2, Rivian delivered 12,640 vehicles, a significant increase from 4,467 in the same period the previous year. Total revenue soared by 208% year-over-year to $1.12 billion, contributing to a reduction in net losses from $1.7 billion to $1.2 billion.

Recent reports indicate that in Q3 2023, Rivian manufactured 16,304 vehicles and delivered 15,564, marking a remarkable 137% year-over-year growth in delivered vehicles. 

The company estimates Q3 revenue between $1.29 billion and $1.33 billion, compared to $0.54 billion in the year-ago quarter, expressing confidence in achieving its previously estimated annual production of 52,000 vehicles.

Rivian’s collaboration with Amazon to deploy 100,000 electric delivery vans by 2030 further emphasizes its strategic positioning in the market. While the company has been burning cash to boost production, it expects to end Q3 with $9.1 billion in cash, sufficient to fund operations through 2025. 

With a low debt-to-equity ratio of 0.29, Rivian is strategically positioned to scale production and expand manufacturing facilities. 

Analysts predict revenue to reach $1.31 billion in Q3, with an annual increase of 161.5% to $4.3 billion by the end of 2023. Looking forward to 2024, revenue is forecasted to rise to $6.86 billion, making RIVN stock seem fairly valued at 2.5 times forward sales, considering its robust revenue growth forecasts. 

Wall Street’s projections on Rivian

A synthesis of projections from 20 analysts on TipRanks over the previous quarter indicates a 12-month average price target of $26.11 for Rivan. This suggests a potential upside of 69.5% from its current trading price, leading to an overarching moderate buy recommendation. In the current month, Rivian has received 12 Buy ratings, 7 Hold ratings, and 1 Sell rating.

On a more positive note, the stock has the potential to reach $40, which would be a significant gain for investors. This optimistic price target suggests that the demand for EVs and market sentiment will improve, driving the stock’s value higher.

The more conservative price target of $15 for Rivian reflects concerns about potential challenges. Analysts are wary of possible disruptions in the supply chain, intense market competition eroding market share, and delays in the development of charging infrastructure. 

This could impede the adoption of Rivian electric vehicles. Investors should consider these factors along with optimistic scenarios, recognizing that actual stock performance may deviate from analysts’ predictions due to unforeseen shifts in market conditions and occurrences. 

Q3 earning report 

In Q3 2023 released on November 7th, Rivian reported impressive results, surpassing analysts’ expectations. 

The company achieved a revenue of $1.34 billion and a net loss of $1.7 billion, outperforming projections that anticipated revenue of $1.31 billion and a net loss of $1.8 billion.

The company’s robust financial position was highlighted by a cash and cash equivalents balance of $15 billion at the end of Q3, reassuring stakeholders that Rivian has ample resources to sustain operations through 2024.

Despite announcing a $1.5 billion green convertible senior notes offering, intended to strengthen its balance sheet, some investors expressed concerns about potential stock dilution. 

Looking ahead, Rivian’s management remains optimistic, reaffirming their guidance for 2024.

The company aims to produce 50,000 vehicles with an expected revenue range of $6 billion to $7 billion, indicating a confident trajectory for future growth and continued success.

The company’s lack of profitability positions its success as contingent on available cash, among other external factors, marking it as a high-risk, high-reward stock. Achieving profitability is tied to a range of factors, so investors should careful monitor the company to ensure it remains on the right trajectory.

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