Sentiment has once again turned negative for Rivian (NASDAQ:RIVN). The stock’s run up toward the end of last year was halted at the year’s open with the announcement of the Q4 delivery haul. Rivian just fell short here, delivering 13,972 vehicles in the quarter vs. the Street’s expectation of 14,111. That said, with the production of 57,000 units in 2023, the company exceeded its production guidance of ~54,000.
Nevertheless, it has been mostly downhill since the disclosure, with the shares already shedding 33% since the turn of the year.
Looking forward to the full Q4 report, Wells Fargo analyst Colin Langan predicts a Q4 adjusted EBITDA of -$1.03 billion, which is in line with the consensus estimate of -$1.06 billion.
As for the 2024 guide, Langan anticipates the company will call for FY24 production volume to ~65,000 units, about the same as Q4’s exit run-rate and mirroring recent comments made by the CFO.
The year is set to be affected by factory downtime in Q2 & Q3 to allow for improvements to the R1 line. Langan anticipates Q1’s run-rate will be similar to Q4’s, with the end of the year bringing about a “material ramp up” towards full capacity of ~150,000 units a year.
Given the company’s objective of gross profit breakeven by Q4 2024, Langan sees Rivian guiding for improved adj EBITDA into 2024. However, he is skeptical the company can come good on that target and thinks investors should also brace themselves for another capital raise. The company raised $4.5 billion in debt last year yet did not extend their cash runway.
“Given we are bearish on RIVN’s ability to reach GPU breakeven by 2024, in addition to $900M of formerly 2023 capex being pushed into 2024, we believe the company may need to raise capital by the end of the year as another lifeline to surpass cash runway of 2025 & begin R2 production in 2026,” he explained.
In light of these concerns, Langan maintains his position on the sidelines, rating RIVN shares as Equal Weight (i.e., Neutral), while lowering the price target from $19 to $18. (To watch Langan’s track record, click here
8 of Langan’s colleagues join him on the sidelines, yet with an additional 12 Buys, the stock claims a Moderate Buy consensus rating. In the year ahead, the analysts see shares delivering returns of ~59%, considering the average target currently stands at $25. (See Rivian stock forecast)
To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a tool that unites all of TipRanks’ equity insights.
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.