Stifel has maintained a Buy rating on Rivian (NASDAQ:RIVN) Automotive Inc (NASDAQ: RIVN) with a price target of $18.00. The firm addressed Rivian's announcement of lower-than-expected third-quarter deliveries for 2024, which fell short of projections.
Despite this, the electric vehicle manufacturer has kept its full-year guidance unchanged, suggesting that fourth-quarter deliveries are anticipated to surpass expectations.
Rivian's production in the third quarter did not meet the initial forecast, leading the company to reduce its 2024 production outlook to a range of 47,000 to 49,000 vehicles, down from the previously estimated 57,000.
The analyst from Stifel highlighted a significant anticipated milestone for Rivian, which is achieving a positive gross profit in the fourth quarter of 2024. Concerns were raised that the lowered production guidance might postpone the achievement of this financial target. The reduction in the production forecast is seen as a short-term obstacle for Rivian's stock performance.
In other recent news, Rivian Automotive has been grappling with lower delivery numbers and production challenges due to a component shortage. This has led to a reduction in Rivian's full-year 2024 production guidance by approximately 16%, according to reports from Truist Securities and RBC Capital. Analyst firms Morgan Stanley, Jefferies, and Goldman Sachs have made adjustments to their ratings and price targets for Rivian, with Morgan Stanley downgrading the stock from Overweight to Equalweight due to anticipated increased capital expenditures related to autonomous vehicle technology development.
Rivian has also been facing challenges in achieving its goal of turning gross profit positive by the fourth quarter of 2024, as pointed out by RBC Capital. The firm noted Rivian's progression from a gross profit of negative $504 million in the first quarter to negative $434 million in the second quarter of 2024.
Despite these challenges, Rivian has secured an investment of up to $5 billion from Volkswagen AG (OTC:VWAGY), which could bolster Rivian's cash reserves and assist the company in achieving its first gross profit by the final quarter of 2024.
InvestingPro Insights
Rivian's current financial situation aligns with the challenges highlighted in the article. According to InvestingPro data, Rivian's revenue for the last twelve months as of Q2 2023 stands at $5.014 billion, with a significant revenue growth of 68.2% over the same period. This growth underscores the company's expanding market presence despite production challenges.
However, the company's financial health remains a concern. InvestingPro Tips indicate that Rivian is "quickly burning through cash" and "suffers from weak gross profit margins." This is reflected in the negative gross profit of $2.06 billion and a gross profit margin of -41.1% for the last twelve months as of Q2 2023. These figures align with the article's mention of Rivian's goal to achieve positive gross profit in Q4 2024, highlighting the importance of this milestone.
The stock's recent performance has been challenging, with InvestingPro data showing a 1-month price total return of -18.83% and a year-to-date return of -54.05%. This volatility is consistent with the InvestingPro Tip noting that "stock price movements are quite volatile."
For investors seeking a more comprehensive analysis, InvestingPro offers 13 additional tips for Rivian, providing a deeper understanding of the company's financial position and market performance.
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