Rivian Handed Buy Rating As Startup Launches New R2 Vehicle With EV Demand In Question

Rivian Automotive (RIVN) reveals a new vehicle Thursday, as the EV startup looks to offer an electric SUV in the $40,000 range even as demand for EVs appears to be slowing in 2024. Meanwhile, a firm initiated coverage of Rivian stock Thursday, handing the stock a buy rating.




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Rivian unveils the R2 — its smaller, cheaper, next-generation vehicle — Thursday. The new vehicle offering is expected to be priced around $40,000. Rivian says the vehicle will also qualify for the $7,500 Inflation Reduction Act (IRA) tax credit.

The R2 SUV will be produced at Rivian’s new Georgia factory. Production of the R2 platform expected to begin in 2026.

Rivian Chief Executive RJ Scaringe said on the Feb. 21 Q4 earnings call that the “R2 represents the essence of our brand, while targeting the significant midsized SUV segment, a massive market with limited compelling EV options beyond Tesla (TSLA).”

Scaringe added there is a lack of choice of “highly compelling EV products” between $45,000-$55,000.

“We remain very bullish on the R2 segment and the R2 product itself,” he added on Feb. 21. “We’ve engaged with our suppliers to ensure that we can ramp effectively as well as laying out the production road map.”

Ahead of the vehicle reveal, RIVN shares jumped 3.9% to 11.45 Thursday during market action. On Wednesday the stock edged up 0.9%. On Thursday, Jefferies Group initiated coverage of Rivian stock with a buy rating and 16 price target.

The firm wrote that Rivian appears closest to Tesla in “spirit,” with its own software stack, strong brand identity, global potential and similar growth pains.

Rivian Stock Falls On Q4 Earnings

Rivian stock has remained near lows after diving more than 25% on Feb. 22 following its fourth-quarter earnings and revenue report. The Irvine, Calif.-based company at that time also announced layoffs and plans to keep production in 2024 flat compared to 2023.

Rivian reported on Feb. 21 a loss of $1.36 per share in Q4 with sales doubling to $1.31 billion. Wall Street expected a loss of $1.35 and revenue totaling $1.28 billion. Looking to 2024, Rivian said it expects production of 57,000 vehicles, flat with 2023. The EV startup also predicts consumer and commercial vehicle deliveries to grow by low single-digits in 2024.

The carmaker also forecast that vehicle deliveries in Q1 2024 will be about 10%-15% lower than in Q4 2023 and that it is laying off 10% of its salaried workers.

Chief Financial Officer Claire McDonough told investors on the Q4 earnings call that Rivian remains “confident that our cash, cash equivalents and short-term investments can fund our operations through 2025.”

“We aim to maintain a strong balance sheet position by continuing to drive cost efficiencies and improve our vehicle unit economics, while opportunistically evaluating a variety of capital markets available to Rivian ranging across the capital structure,” McDonough said.

However, the EV startup appears focused on the R2 launch and production.

Rivian stock ranks ninth in IBD’s Automakers industry group. RIVN has a 22 Composite Rating out of 99. Additionally, the stock has a 7 Relative Strength Rating and its EPS Rating is 41 out of 99.

Please follow Kit Norton on X, formerly known as Twitter, @KitNorton for more coverage.

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