One of the biggest developments in the automotive sector this week is EV maker Rivian’s (NASDAQ:RIVN) joint venture with Volkswagen (OTC:VWAGY) (DE:VOW3). The $5 billion deal has pushed Rivian shares nearly 40% higher in the premarket session today, and analysts are beginning to weigh in on the development.
The Deal
The joint venture involves Volkswagen initially investing nearly $1 billion into Rivian and increasing its total investment to $5 billion by 2026. For Rivian, the deal is a major lifeline as the influx of cash is expected to help the company become cash flow positive. Moreover, the partnership could help both Rivian and Volkswagen lower their cost per vehicle as economies of scale kick in.
Potential Short Covering in RIVN
The optimism from this deal has already pushed Rivian’s share price nearly 40% higher today, and more gains could pile up as short sellers run for exits. Notably, short interest in Rivian stock stands at an elevated 18.6% at present.
Analysts Begin to Weigh in on RIVN
Meanwhile, Wall Street has begun to sit up and take notice of the action. Guggenheim’s Ronald Jewsikow has initiated coverage on Rivian with a Buy rating and an $18 price target. Barclays’ Dan Levy, though, is still sitting on the sidelines with a Hold rating and a $10 price target for RIVN. In comparison, the stock is already hovering around $17 levels today.
What Is the Target Price for RIVN?
Overall, the Street has a Moderate Buy consensus rating on Rivian, alongside an average RIVN price target of $13.79. However, one can expect more analyst re-ratings on the stock over the coming days.
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