Tesla (NASDAQ:TSLA) disappointed with its Q3 delivery numbers but, in contrast, one prospective competitor outpaced expectations.
EV maker Rivian’s (NASDAQ:RIVN) Q3 deliveries reached 15,564 vehicles, up 23% from the previous quarter, while beating the Street’s call for 14,973. It also represented a big improvement on the same period last year; in 3Q22, Rivian delivered 6,584 units.
Total production at the firm’s Normal, Illinois facility reached 16,304 vehicles, while the company said it remains on course to produce 52,000 vehicles this year. That might have rankled a bit with investors, as at 53,600, the consensus estimate for the year is higher.
Looking ahead to the full Q3 report, Morgan Stanley analyst Adam Jonas tempers expectations regarding a repeat of the size of improvement in gross margins seen in Q2, when the figure went from negative 81% to negative 37%. Nevertheless, he still thinks Rivian “may be in position to surprise the market positively on headline/underlying gross margin and cash flow in the next couple of quarters.”
“Their attractive products are seen on the streets with increasing frequency,” he notes optimistically, although Jonas also adds that similar to many startup EV companies under his coverage, Rivian is “not yet self-funding.”
“Specifically,” the analyst says, “we still forecast the company will require around $5bn of additional equity capital collectively from 2024 to 2025, an amount roughly equal to 20% of the company’s current market cap.”
Nonetheless, Jonas believes that Rivian could be one of the main beneficiaries following the resolution of the UAW strike, as traditional automotive giants will substantially scale down their EV initiatives.
“If legacy auto makers pull back/push out their EV plans over the medium term, we could see market share potentially available for Rivian to tap into,” Jonas opined.
All told, Jonas rates RIVN shares an Overweight (i.e., Buy), backed by a $24 price target, suggesting the stock will post growth of 25% in the months ahead. (To watch Jonas’ track record, click here)
Most analysts agree with Jonas’ assessment, although not all are convinced. Based on a mix of 13 Buys, 7 Holds and 1 Sell, the stock claims a Moderate Buy consensus rating. The average target is more bullish than Jonas permits; at $28.57, the figure allows for 12-month returns of 49%. (See Rivian stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
