Rivian has few catalysts in 2024 beyond its new SUV, but longer-term story is intact, analysts say
Rivian Automotive Inc. is staring down a challenging 2024 with few catalysts beyond the unveiling of its new midsize SUV, the R2, in the coming weeks, but the EV maker’s longer-term story remains intact, analysts said Thursday.
Baird analyst Ben Kallo said he’s sticking with an outperform rating on the stock
RIVN,
after disappointing earnings released late Wednesday, showing a larger-than-expected quarterly loss and guidance that implies it will produce slightly fewer cars than in 2023.
The company said it would make 57,000 EVs this year, compared with the 57,232 EVs produced in 2023. Wall Street estimates for 2024 production hover around 66,000 vehicles to 68,000 vehicles.
The company plans to cut operational costs and apply what it has learned to its new factory in Georgia, which is slated to start production in 2026.
Production guidance “was underwhelming” with significant changes to its manufacturing facility ahead, Kallo wrote in a note to clients. The company has been upfront about its manufacturing issues for several quarters and a quarterly decrease was expected, he wrote.
Read also: Rivian can’t avoid the ‘EV winter,’ Barclays warns in downgrade of its stock
“However, the degree of the impact was more severe than our/Street estimates, and we believe will pressure shares in the near term,” said the note.
The company has several areas for cost reductions, and it’s investing for a strong long-term setup. “We continue to like the product, brand, and management, but are removing (the stock) as a Best Pick for 2024,” Kallo wrote.
Rivian’s stock was down 27%, on track to close at a record low and also to notch its largest one-day percentage decline ever. The company said high interest rates and economic pressures had informed its outlook for 2024.
Despite the “choppy” results and outlook, Rivian is “still in right place/time with right product/strategy,” John Murphy with BofA Securities said in his note.
Murphy kept his buy rating on the stock, saying it was based on “our view that the company is one of the most viable among the start-up EV automakers with attractive product, solid long-term strategy, and adequate funding well into 2025.”
Mizuho analysts also stuck with a buy rating on the stock, but lowered their price target to $24 from $30.
The numbers are a further sign that the EV honeymoon is over with headwinds in 2024 that include the sunset of subsidies in the U.S. and Germany and a weaker consumer, wrote analysts led by Vijay Rakesh.
“While we would note Rivian is experiencing similar macro headwinds to the rest of the EV market, we see it as attractive with a good product portfolio focused on SUVs/Pickups while trading at a steep 70%/40% discount compared to peers Tesla/Lucid, respectively,” the analysts wrote.
Rivian is expected to increase revenue by 13% in fiscal 2024 and by 69% in fiscal 2025, said the note. Production is expected to ramp up, it has about $9.4 billion in cash on hand and has a path to profitability in the fourth quarter of 2024, they wrote.
Rivian’s “rough quarter” set up 2024 as a year that “can now only be a year of ‘beating lowered expectations’ one quarter at a time,” Evercore ISI analysts said in their note. That’s among the only ways for the stock to “regain any of its earlier momentum” despite the new EV reveal on March 7, they said.
The R2 EV is a cheaper compact SUV and also be cheaper to produce. Rivian’s R1T pickup truck and the R1S full-size SUV start at around $70,000 and $75,000.
Rivian wasn’t the only EV maker to offer disappointing production guidance on Wednesday. EV startup Lucid Group Inc.
LCID,
guided for 2024 production of only about 9,000 vehicles, having produced 8,428 vehicles last year.
Lucid’s stock was down 20%. Tesla Inc.’s stock
TSLA,
fell 1.2%.
Rivian’s stock has fallen 41% in the last 12 months, while the S&P 500
SPX
has gained 24%.
Claudia Assis in San Francisco contributed.
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