This Is Where Wall Street Sees Rivian Heading Next After It Hits All-Time Lows

This year, most electric car stocks have increased, but Rivian is one that hasn't.

‍

Its shares continue to fall to record lows, briefly falling below the $13 mark in March. Shares have decreased by almost 25% so far this year.

‍

The Global X Autonomous & Electric Vehicles ETF, in comparison, has increased by more than 20% year to date. Lucid has increased by around 20% in that time, compared to 56% growth for rival EV manufacturers like Tesla.

‍

Shares of Rivian

‍

The underperformance of Rivian in comparison to its competitors follows a number of events this year. Most recently, it reported that talks were ongoing with Amazon to modify an exclusivity agreement for the manufacture of 100,000 trucks for the world's largest online retailer. It happened as Amazon's order totals disappointed.

‍

Shares of Rivian also fell after the company announced plans to sell convertible notes in order to obtain $1.3 billion in cash.

‍

Where will the EV manufacturer next go? Here are the opinions of Wall Street analysts.

‍

190% increase?

‍

With the stock currently trading barely below its cash worth, Morgan Stanley claimed in a research note dated March 21 that it had observed investors' "frustration over plan and lack of sincerity in the strategic future of the company."

‍

It identified a few variables that might affect the company's future course.

‍

One was cost reduction, which is a tactic used by many IT companies and EV manufacturers to "give more runway to their businesses that have yet to generate cash."

‍

But, Morgan Stanley predicts Rivian might spend up to $6 billion this year on operational and capital expenditures based on the company's expectations, which is 1.5 times projected full-year 2023 revenues.

‍

In a comparison with Tesla, analysts at Morgan Stanley led by Adam Jonas also highlighted its "aggressive expansion."

‍

According to their analysis of Rivian's operational performance in 2023 (negative 66% gross margin) compared to Tesla's operational performance in 2015 (21.3% gross margin), Rivian's report showed, consolidations and simultaneous launch strategy appears to be the most taxing on the organization.

‍

The bank stated in a different report that Rivian is investing more because it intends to grow at a "far greater" rate than Tesla did in 2015.

‍

Is it appropriate to add a second plant and a third model line (RT) at this time, given the upcoming uncertainty?

‍

", they continued, alluding to Rivian's $5 billion facility in the state of Georgia, United States.

‍

While maintaining an overweight rating and a $26 price objective for the stock, Morgan Stanley still believes there is roughly 90% upside potential.

‍

Apart from Tesla, which is also rated overweight, the bank's analysts, led by Adam Jonas, said Rivian was the other EV start-up company they would suggest.

‍

We continue to be motivated by the company's unique product, scalability end markets, cost-cutting potential, cash position, and valuation, they added, even though the stock presents a relatively broad risk/reward tilt ($5 bear case to $55 bull case).

‍

Rivian is "losing cash," according to a March 16 note from financial services company Canaccord Genuity.

‍

Yet, it claimed that the $1.3 billion bond offering was largely successful. Given the challenging capital markets climate, particularly for companies involved in sustainability, it noted, "We were pleased by the company's raising."

‍

Morgan Stanley and Canaccord analysts both noted the potential for further agreements outside of Amazon that would benefit Rivian.

‍

Although they claim that having more partners will undoubtedly benefit Rivian, they do not believe that the prospective termination of the Rivian-Amazon exclusive deal marks the "start of a breakup."

‍

"Amazon has been the sole recipient of Rivian's commercial cars to yet. We do, however, believe that there is a sizable opportunity for new partners to gain market share," they stated.

‍

"These developments are methods via which the company can broaden (its customer perceptions of service quality slate) and reinforce (its balance sheet) to much more firmly execute upon long-term purpose," Canaccord said in reference to the news of the exclusivity deal as well as the fundraise.

‍

Canaccord set a $40 price target for Rivian, representing a potential gain of more than 190%.

‍

BofA set a $40 price objective for the stock in a report on March 10.

‍

The BofA analysts stated, "We retain our Buy on RIVN, which is founded on our opinion that it is one of the most viable start-up EV manufacturers and a relative competitive challenge to incumbent OEMs (and perhaps to other automotive-related verticals)."

‍

According to Trade Algo, analysts who follow the stock assigned it an average upside potential of more than 100% and a buy rating of 62%.