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Rivian: Ignore the Noise and Buy the Dip, Says Analyst


Rivian (RIVN) stock has had quite a ride since going public, increasing 61% before crashing back down whilst shedding 46% of its value.

The drop came on account of the company’s first earnings report as a public entity. Rivian delivered 11 R1Ts in the quarter which resulted in total revenue of about $1 million. The company’s lofty valuation, however, has less to do with present sales and is based on the electric truck startup’s promise. Here the Street appeared disappointed to learn of a slower-than-expected zoom out of the gates.

The company was targeting production of 1,200 vehicles in 2021 but said it expects to fall short of that figure by a few hundred and has attributed the softness to that very 2021 bogeyman – temporary bottlenecks. Additionally, assembling the complex battery module used in the vehicles has proved a challenge (each battery pack has 9 modules and a highly automated process).

However, Deutsche Bank’s Emmanuel Rosner is unperturbed by these snags.

“While Rivian’s ramp-up issues will result in fewer vehicles delivered in 2021,” said the analyst, “They sounded temporary in nature and seem to have already been largely addressed.”

In fact, the analyst is buoyed by other positive developments. As of December 15, management said pre-order reservations for R1 vehicles had reached 71,000, up from the end of October’s 55,000, and which have led management to consider price increases.

Rosner counts raised brand awareness from the blockbuster IPO and the R1T being named Motor Trend’s 2022 “Truck of the Year” as the reasons why the company is gaining “accelerated traction with consumers.”

The company also announced it had found the Georgia location for its 2nd manufacturing plant. The State has granted Rivian some “generous incentives” which could help capex come in below prior expectations.

Although Rosner reduced his Q4 deliveries and earnings estimates, the analyst sticks to his 2022 forecasts and remains a fully-fledged RIVN bull.

“We continue to believe the company offers a particularly well thought-out business plan to become a large and profitable EV player, with unique characteristics in both hardware and software, and applying lessons from previous efforts by other players,” the analyst summed up.

To this end, Rosner rates RIVN shares a Buy, backed by a $130 price target. If correct, investors could be lining their pockets with ~41% gain. (To watch Rosner’s track record, click here)

The Street’s overall price target is just a touch higher; at $134.64, the figure implies the stock will be changing hands for ~48% premium a year from now. Rating wise, 4 analysts are skeptics but all 10 other ratings are to Buy, culminating in a Moderate Buy consensus rating. (See RIVN stock analysis on TipRanks)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.

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