On Monday, Goldman Sachs maintained a Neutral rating on Rivian (NASDAQ:RIVN) Automotive Inc (NASDAQ:RIVN), with a steady price target of $11.00. The electric vehicle manufacturer reported lower-than-expected vehicle deliveries and production numbers for the third quarter of 2024.
Rivian delivered approximately 10,000 vehicles, marking a 27% quarter-over-quarter decrease and a 36% drop compared to the same period last year. This figure fell short of both Goldman Sachs' estimates and the Visible Alpha Consensus Data.
Rivian managed to produce 13,200 vehicles in the same quarter. However, the company has revised its production forecast for the full year of 2024 to 47,000-49,000 vehicles, a reduction from the previously anticipated 57,000 units. The downward adjustment was attributed to ongoing supply chain constraints.
Despite this, Rivian reaffirmed its delivery guidance, expecting a low single-digit year-over-year growth, with projected deliveries ranging between 50,500 to 52,000 vehicles. These projections are below Goldman Sachs' prior estimate of 52,300 and the consensus estimate of 53,500.
The focus for investors, according to the report, will likely be on several key areas moving forward. These include Rivian's ability to resolve supply chain issues, demand for its R1 model amidst a relatively soft electric vehicle market, the company's management of pricing and costs to achieve gross profitability, and progress on the R2 vehicle.
The reiterated Neutral rating indicates that Goldman Sachs does not foresee significant stock movement for Rivian in the near term, based on the current challenges and outlook provided by the company.
In other recent news, Rivian Automotive has been dealing with production challenges due to a component shortage, leading to lower-than-expected third-quarter deliveries and a reduced 2024 production forecast. Despite these setbacks, Baird has maintained its Outperform rating, while Canaccord Genuity and Stifel have kept their Buy ratings.
RBC Capital has also retained its Sector Perform rating on the shares. It's important to note that Rivian has secured an investment of up to $5 billion from Volkswagen (ETR:VOWG_p), a development that could bolster its financial position.
Simultaneously, Rivian is seeking federal aid to resume the construction of its $5 billion electric vehicle plant in Georgia, following a challenging period marked by a reduction in its annual production forecast due to ongoing parts shortages. The company's full-year 2024 production forecast has been revised to between 47,000 and 49,000 vehicles, down from the initially projected 57,000 units.
The market's response to Rivian's strategies for margin improvement and its partnership with Volkswagen will be closely watched, as these factors are expected to play a significant role in Rivian's trajectory toward profitability. Despite the production hurdles, Rivian's year-over-year delivery growth guidance remains in the low single digits, a target that has been reaffirmed despite the production challenges.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Rivian's financial situation, complementing Goldman Sachs' analysis. Despite the challenges highlighted in the article, Rivian's revenue growth remains strong, with a 68.2% increase over the last twelve months as of Q2 2024. However, this growth comes with significant challenges, as reflected in the company's financials.
InvestingPro Tips indicate that Rivian is "quickly burning through cash" and "suffers from weak gross profit margins." These insights align with the production and delivery challenges mentioned in the article, as well as the revised forecasts. The gross profit margin of -41.1% for the last twelve months ending Q2 2024 underscores the company's struggle to achieve profitability in its manufacturing operations.
It's worth noting that Rivian's market capitalization stands at $10.53 billion, reflecting investor sentiment amidst these challenges. For those seeking a more comprehensive analysis, InvestingPro offers 11 additional tips on Rivian, providing a deeper understanding of the company's financial health and market position.
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