Rivian Automotive, Inc. (NASDAQ: $RIVN) is an electric carmaker founded in 2009. The company focuses on outdoor recreation with its line of high-end cars that are bigger and have better off-road capabilities.
Its line of outdoor cars is akin to a cross between a Jeep and a Tesla. Until 2022, Ford was one of Rivian’s largest shareholders. However, the Detroit automaker sold most of its share in the startup, worth about $3 billion.
Rivian Automotive, Inc. Earnings Report
Despite the broader macroeconomic pressure facing the EV sector, Rivian raised its production forecast in the latest fiscal Q3 earnings report. Overall, the company posted better-than-expected results for the quarter.
In the report, Rivian Automotive, Inc. stated that it produced 16,304 vehicles in Q3. That figure is its highest production volume to date. Additionally, the company reported an improvement in cost efficiency. The company has taken various measures throughout 2023 to cut production costs, which have paid off.
According to the report, gross profit per unit was up by around $20000 in Q3. Consequently, Rivian Automotive reported a reduction in net loss to $1.37 billion in Q3, compared to $1.72 billion in the same period last year. The company also raised its production for FY23 to 54,000 units, an increase of 2000 units from the previous forecast.
Rivian Automotive posted a better-than-expected EPS of $-1.19 against the expected $-1.32, a surprise of 10.08%. Revenue was also better than the analysts’ expectations at $1.34 billion, against an expected $1.31 billion, a surprise of 2.37%. Rivian Automotive has beaten analysts’ expectations 100% of the time for the past four quarters.
Rivian Automotive Stock Performance
Despite the positive numbers in the Q3 earnings report released on November 7, 2023, Rivian Automotive stock (RIVN) slid marginally by 2.41% and was trading at $17 at close on November 9, 2023. Year-to-date, the stock is down 1.96% and 39.44% in the past 12 months.
Why Rivian Automotive Stock is Underperforming
In early October, Rivian Automotive released a conservation full-year production guidance, which caused some traders to abandon the stock. RIVN stock has lost nearly a third of its value since then. While Rivian Automotive stock revised the guidance in the earnings report, the stock has not improved. One reason for this is the risk of share dilution arising from the company’s issuance of a $1.5 billion convertible bond in October.
Another factor is the slowed demand for EVs amidst ongoing macroeconomic pressures. Consequently, the upside potential for the stock is likely to remain low. Most investors will likely remain on the sidelines as they closely monitor the company’s ability to achieve the breakeven point by FY24.
Rivian Automotive Stock Forecast
Stock analysts have given Rivian Automotive (RIVN) a moderate buy rating. They predict an average price target of $26.28, with a high price target of $40 and a low of $15. Based on the average price target, RIVN stock has a 54.59% upside based on the current price of $17.00.
Should You Buy Rivian Automotive Stock?
Rivian Automotive Stock has several challenges it needs to overcome. For one, the company has never been profitable. With a quarterly cash burn of around $1 billion, it is a long way from achieving the mass production volumes needed to make it more competitive. However, it has thus far managed to evade Tesla’s CEO prediction that it would go bankrupt.
On a positive note, Rivian has an agreement with Amazon, which owns 16.70% of RIVN stock, to produce 100,000 electric vans. However, RIVN stock is still below its 50-day and 200-day moving averages, which are key metrics to check when investing in stocks. Based on all these facts, the analysts’ rating of a moderate buy is accurate.
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