Rivian stock (RIVN:NSD) beats on earnings and gets Buy rating

The stock remains unchanged for the year. The Crowd rating on the stock is set at a Strong Buy.

RIVN Stock Forecast & Price:

 
Rivian stock forecast has the average analyst target price at USD 49.37 over the next 12 months by 18 analysts. RIVN consensus analyst rating is set at a Buy. Stock Target Advisor analysis of Rivian’s shares is currently Bearish (1 good signal and 3 bad).  Rivian stock price was USD 31.85 as of the market closeRivian stock price has changed by -4.87% over this week and is down 6.19% over the month.  The stock remains unchanged for the year. The Crowd rating on the stock is set at a Strong Buy.
 

Earnings Release and Impact

 
Rivian, the EV manufacturer, released its quarterly earnings. It confirms the company’s output target.  The company’s shares are up after reporting better results than estimates. The company’s net loss has reduced.  The company reported a loss of $1.2 billion, against $1.7 billion from last year.  Rivian reported a loss of $5 billion over the last 9 months of business.
 
They started producing trucks in October 2021. They claimed third-quarter revenue of $536 million and built 7,363 automobiles. The previous quarter reported 4,400 automobiles and $364 million in revenue. 
 
The company had $13.8 billion in cash at the conclusion of the third quarter. They used $1.7 billion of it during the third quarter. This gave them cash to cover operations through 2025, which resonated with investors. 
 
Rivian reported revenue of $536 million for the quarter. It fell short of estimates of $561.1 million. The company reported an adjusted EPS loss of $1.57 per share, which was better than the forecasted loss of $1.86 per share.

Rivian Expansion Plans

 
Rivian updated its expansion to $1.750 billion due to its “streamlined product roadmap”. It affirmed its $5.4 billion adjusted EBITDA deficit for the current fiscal year.
 
They lowered its forecast for capital investments in 2022. They shifted some planned spending to 2023. It now anticipates its full-year capital expenditures to total roughly $1.75 billion. This is down from the $2 billion it had set following the second quarter.
 
According to the guidance it provided in August, the company continues to expect that its:
  • Adjusted loss before income,
  • Taxes,
  • Depreciation,
  • Amortization
for the entire year will total $5.4 billion.
 
Rivian had $13.8 billion in cash on hand as of September 30, which is a  decrease from $15.5 billion as of June 30.

Rivian Supply Chain Issues

The company reiterates that its supply chain is still facing disruptions. Yet, the company is taking action to cut costs and delay cost outlays on new products.
 

Rivian Product Launch and Demand

The company confirmed the launch of its smaller vehicle platform, known as R2. It is set for production in 2026, delayed by a year. The R2 platform is set to produce in a brand-new manufacturing facility in Georgia.
 
Rivian’s R1-series trucks and SUV orders have increased from  98,000 as of August 11 to over 114,000. This figure is on top of the 100,000 electric delivery vehicles for the Amazon delivery fleet.
 
On October 3, Rivian reported that it built 7,363 automobiles in the third quarter and gave 6,584 of them to clients. Through the third quarter of the year, Rivian produced 14,317 automobiles.

EV Automakers Issues

 
On Wednesday the company changed the delivery mode. It has switched from transporting vehicles by truck to rail. This is due to the manufacturing output increase.
 
The main problem facing the company right now are:
  • Raising production levels enough to fulfil the demand for its vehicles,
  • Pay for their production costs, and generate a profit.
 
The ongoing global shortage of:
  • computer chips,
  • batteries and other equipment
have plagued other automakers. It’s an issue the company needs to address to achieve its production levels going forward. 
 
The company has added a second shift to its Normal, Illinois production facility. It will help assist its goal of producing around 25,000 vehicles by the end of the year.
 

Positive Fundamental Analysis for Rivian Stock:

 

High market capitalization:

The company is the largest entity in its industry which make the stock more stable and reliable.
 

Negative Fundamentals:

 

Highly leveraged:

The company scores very low on its debt-to-equity ratio and gets leveraged.  Sometimes this happens as it’s trying to grow aggressively.
 

Negative cash flow:

Rivian stock had a negative total cash flow in the latest four quarters.
 

Negative free cash flow:

Rivian had negative total free cash flow in the last four quarters.

Rivian Automotive Inc. (RIVN:NSD) offers an attractive valuation proposition for the long term

CFRA downgrades Rivian Automotive to sell at a $25 target price.

Rivian Stock Forecast

Rivian Stock Forecast finds that Rivian share price has collapsed almost 70 percent so far this calendar year. The main culprit of the stock’s decline is the broad-based sell-off in growth names, especially those that are in high growth mode, and that are accumulating losses through the growth in it’s operations. The initial issue with the company started with the high IPO valuation(company commenced trading at 35 times estimated sales) that set the stock up for a prolonged slide, coupled with risk off behaviour due to various economic negatives, created the perfect environment for Rivian’s stock to lose a considerable chunk of it’s valuation.

Management at Rivian has forecasted that the company will stay in the negative earnings space for a considerable time, which has also caused investors to bail on the stock.  In the company’s most recent earnings report, Rivian reduced it’s adjusted earnings estimates, forecasting a loss of $5.45 billion, which was a catalyst from ramping up production in conjunction with rising material and input costs. This adjustment to the company’s net loss was previously stated at $4.75 billion. 

Rivian’s main product is it’s line of EV pick up trucks, in which it is struggling to increase production, very similar to what Tesla experienced with it’s model 3 initially. To make matters worse, the company is cutting 6% of its workforce in order to respond to the change in the economic climate.

However, this negative sentiment and reduction in RIVN’s stock valuation, could present the ideal point in which to enter the company’s stock for a long term play. Rivian is favoured as the best Startup EV manufacturer with the ability to compete head to head against the market leader, Tesla Corp.  The demand for EV’s continues to be robust and it’s accelerating under the current energy crisis that is hitting western markets.  Rivian just recently received it’s seal of approval and a boost in the company’s level of confidence,  in solidifying it’s partnership with the Daimler Group to build electric Rivian vans in Europe, which could assist Rivian in helping it quickly scale up it’s operations, by leveraging Daimler’s assets. Both companies will invest in,  and operate the new jointly owned venture  at an existing  Daimler  manufacturing site, that will begin production sometime in 2024. 

Rivian is structured differently than existing EV start-ups, as it designs most of its hardware and software within the company’s internal operations. This will facilitate  product differentiation, a better customer experience and better margins.  Amazon invested $700 million in the company in  2019, and has orders to buy 100k  of EV vans for Amazon’s transition to a EV delivery fleet.  Rivian as a result is still poised to continue it’s growth trajectory and remains on target in challenging Tesla for dominance in the EV space, and the stock’s valuation should be seen as more of a positive than a negative.  The current valuation of the stock offers a extremely attractive entry point for establishing a long position in Rivian’s stock, and could prove to be a very lucrative investment within 5 years from now.

Rivian Stock Forecast Analysis:

Based on the Rivian stock forecast from 17 analysts, the average analyst target price for Rivian stock forecast is USD 52.07 over the next 12 months. Rivian Automotive Inc’s average analyst rating is Buy . Stock Target Advisor’s own stock analysis of Rivian Automotive Inc is Bearish, which is based on 1 positive signals and 4 negative signals. At the last closing, Rivian stock price was USD 33.56Rivian stock price has changed by -14.52% over the past week, +2.01% over the past month and 0% over the last year.

 

Most Recent Analyst Ratings for RIVN’s stock:

Downgraded by Cfra Sell USD 25 2022-09-24
Initiated by Needham & Company LLC Hold 2022-09-14
Target Up Goldman Sachs USD 41 2022-08-15
Upgrades STA Research Buy USD 35 » USD 52 2022-08-15
Maintains D.A. Davidson Underperform USD 24 » USD 27 2022-08-12
Maintains Zacks Research Inc. Hold 2022-08-12
Maintains Mizuho Securities Buy USD 70 » USD 65 2022-08-12
Lowered Deutsche Bank Capital USD 46 2022-07-19
Adjusts STA Research Hold USD 35 2022-07-18
Initiated by Canaccord Capital Buy USD 61 2022-07-13
Target Raised by Wells Fargo Equal Weight USD 24 » USD 30 2022-07-11
Target Raised by Wedbush Outperform USD 30 » USD 40 2022-07-08
Maintains STA Research Buy USD 32 2022-06-27
Maintains Mizuho Securities Buy USD 80 » USD 70 2022-06-27
Initiates Coverage On D.A. Davidson Underperform USD 24 2022-06-02
Target Down Morgan Stanley Overweight USD 60 2022-05-17
Assigns STA Research Buy USD 32 2022-05-17
Maintains Deutsche Bank Capital Buy USD 90 » USD 69 2022-05-13
Maintains Barclays Equal-Weight USD 38 » USD 24 2022-05-13
Upgraded by BNP Paribas Underperform » Neutral USD 26 2022-05-12
Target Lowered by RBC Royalbank USD 100 » USD 77 2022-05-12
Maintains Mizuho Securities Buy USD 90 » USD 80 2022-05-12
Maintains Wedbush Outperform USD 60 » USD 30 2022-05-12
Target Lowered by Piper Sandler USD 112 » USD 108 2022-05-12
Target Lowered by Robert W Baird USD 84 » USD 67 2022-05-12