It seems like Rivian is facing some significant challenges, particularly regarding its financial performance and production costs. Despite receiving praise for the quality of its products, the company is grappling with the issue of high manufacturing costs, resulting in losses on each vehicle sold and substantial cash burn to sustain operations.
Jefferies analyst Philippe Houchois suggests that these difficulties may simply be part of the growing pains experienced by a company in the EV industry. He draws parallels between Rivian and Tesla, noting similarities in their business models, brand identity, and growth trajectories. However, Houchois acknowledges that Rivian must address two critical challenges to secure its future: significantly reducing production costs and demonstrating cost efficiency in developing its new R2 model.
The success of Rivian’s efforts to overcome these challenges will likely determine its trajectory in the competitive EV market.
Houchois suggests that Rivian’s ability to address these challenges will determine its ability to secure the necessary funding for the launch of its R2 model and whether it can maintain its independence or become an acquisition target for a larger entity.
Despite anticipated volatility due to reduced volume in the first half of the year, Houchois believes there is an opportunity for investors, given Rivian’s current share price. He initiated coverage of Rivian with a Buy rating and a price target of $16, implying a potential increase of approximately 43% in the coming months.
However, opinions from other analysts are more varied. The consensus among analysts includes 10 Buy ratings, 9 Holds, and 2 Sells, resulting in a Moderate Buy consensus rating. The average price target of $17.70 suggests around 57% upside potential from the current share price.