If you’re reading the financial news, you’ve probably noticed that Rivian (RIVN) is grabbing some headlines and investors’ attention for all the wrong reasons. The truck manufacturer entered the Nasdaq in 2021 with the backing of giants such as Amazon (AMZN) and Ford (F), and on November 16th of that year, it had a $170 per share price tag. It is now long gone from its past highs, with its stock price standing at $10.03 at this time of writing. In short, since its IPO, the company has faced ongoing challenges, such as supply chain disruption, causing parts shortages, and lowered production of new automobiles as a by-product. For the Fiscal year 2024, RIVN management has already lowered its expected volume production by 8000 to 10000 cars.
According to Tipranks’ stock Smart Score, RIVN stock gets an Underperform rating of 2, equivalent to a strong sell or bearish outlook. Bearish hedge fund trends, negative news, and crowd wisdom sentiment are the reasons. You can find more about Rivian’s latest news here.
After this bearish intro, let’s examine three reasons to stay optimistic about RIVN stock:
- Strong Backing and Partnerships: Although Ford sold its shares in 2022, Rivian still has the backing of Amazon, which doubled down on its RIVN shares and has an agreement for Rivian to deliver 100,000 cars by 2030. This strong belief in Rivian’s technology can generate enough funds to navigate these financially challenging times. It can also grow the company’s credibility among other potential investors. In other news, Volkswagen (VOW3) and Rivian launched a new partnership in June to develop a new electric vehicle. As part of this agreement, the German automaker plans to invest up to $5 billion in Rivian and their joint venture over the next two years. A very positive news and a vote of confidence in the company.
- Promising Product Line: Rivian designs electric vehicles for people engaged in outdoor adventures, which separates them from other EV manufacturers. Its R1T pickup and R1S SUV are designed with high ground clearance, off-road capabilities, and strong performance. In addition, according to a recent survey among its customers, 86% replied they’re inclined to buy another vehicle from the company, pointing to their satisfaction with their purchase. It seems the company is beginning to create some brand loyalty. Nevertheless, RIVN is making cars for the adventurous and developing commercial vans for the day-to-day people.
- Cost Reduction Initiative: Rivian is working to lower production costs and improve its finances. By 2026, It plans to introduce its Gen 2 platform, aiming to reduce material costs by 45%. This cost reduction could help Rivian become profitable more quickly. Also, there’s operational efficiency. The company must have learned from past mistakes to better manage its supply chain, which caused production delays.
What Is the RIVN Price Target?
Rivian is a Moderate Buy on Wall Street, with Nine Buys, 10 Holds, and 0 Sell. The average price target for RIVN stock is $17.63, reflecting 74.55% upside.
Conclusion
Let’s be honest, Rivian’s overall state doesn’t look particularly great. It has manufacturing problems, doesn’t meet its yearly production, and has a hefty debt hovering over its management’s head. However, there are reasons to stay optimistic about its fortunes. Its designs are getting positive reviews, its customers are happy (those who finally got the cars), and it has the backing of Amazon and a collaboration with Volkswagen. So, I haven’t prepared the casket just yet.
