Despite delivering better-than-expected quarterly results, Rivian Automotive Inc. failed to see a positive impact on its stock performance. The majority of analysts remain cautious about the company’s future prospects.
On Wednesday, Rivian’s shares (RIVN, -8.09%) experienced a decline of over 9% following the announcement of their second-quarter results. Although the company surpassed Wall Street expectations and raised its production guidance to 52,000 vehicles for the year, from an initial estimate of 50,000, investors were not convinced.
The stock is expected to reach its lowest point in over a month and is poised for its largest single-day percentage decrease since March 7 when it dropped by over 14%.
In his note, Alex Potter at Piper Sandler expressed mixed sentiments, stating that it was a “good” quarter for Rivian. However, the potential for significant stock growth is hindered by capital burden, leading Potter to maintain a rating equivalent to “hold” for Rivian shares.
Potter mentioned, “We cannot deny: Rivian has begun building credibility, and we’re still big believers in the product, the brand, and the strategy (which mimics Tesla’s approach to vertical integration).” Despite raising the price target to $22 from $14, questions regarding the company’s future direction remain. Thus, Piper Sandler’s rating remains neutral.
Piper Sandler’s price target suggests a downside of approximately 3% compared to Wednesday’s share price.
Truist analyst Jordan Levy acknowledged Rivian’s “methodical approach to cost reduction” as a commendable aspect demonstrated by the company. However, he maintained his buy rating and $30 price target unchanged.
Rivian has impressed with its in-house integration strategy but continues to face skepticism from analysts who are evaluating its long-term potential. The EV manufacturer must carefully address concerns and maintain its focus on growth.
Rivian’s Acquisition of Iternio Could Drive Significant Growth
Analysts Bullish on Rivian’s Future
In a recent report, Michael Shlisky from DA Davidson raised his price target on Rivian’s shares to $25 from $18. However, he did not upgrade his hold rating on the stock. Shlisky believes that Rivian’s recent acquisition of Swedish mapping company Iternio and its app A Better Routeplanner is being underestimated by the market. According to Shlisky, this acquisition could be a significant factor in Rivian’s growth.
Cautious Optimism Surrounding Rivian
Despite the positive outlook, Shlisky also expressed some caution with regards to Rivian’s future. He noted the increasing number of electric SUVs and pickup trucks entering the market, including General Motors Co.’s Cadillac Escalade IQ. Shlisky acknowledged that there are execution risks involved but stated that Rivian appears to be moving in the right direction.
Impressive Performance and Growth
Rivian’s stock has experienced a significant surge in recent months, especially after the company reported better-than-expected quarterly deliveries and production in early July. Over the past three months, the stock has gained more than 60%, outperforming the S&P 500 index, which has only advanced about 9% during the same period. Year-to-date, Rivian’s stock is up 23%, compared to a 16% gain for the index.
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