Rivian (RIVN) stock gets a boost ahead of R2 launch with new buy rating

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EV maker Rivian’s (RIVN) stock is trending Thursday ahead of the highly anticipated launch of its new R2 electric SUV. Rivian stock scored a buy rating from Jefferies Finacial Group, suggesting over 45% upside potential.

Rivian stock scores buy rating ahead of R2 reveal

Rivian will reveal its more affordable R2 electric SUV at 10 am PT (1 pm ET) later today at its swanky new Laguna showroom. The event will be live-streamed, and you can check back here for the full details.

Leading up to its release, Rivian has teased the new electric SUV, showing what appears to be a smaller version of its top-selling R1S.

Rivian’s CEO, RJ Scaringe, vows that the R2 keeps the “essence of the brand” in a smaller, more affordable package. Leaked info earlier this week shows the R2 will start at $47,000 with up to 330 miles range. With the anticipated $7,500 EV tax credit, the R2 starting price could potentially fall below $40,000.

Meanwhile, there’s still plenty to be revealed later today. Ahead of the official R2 debut, Rivian’s stock earned a buy rating from Jefferies with a $16 price target.

Rivian-stock-R2
Rivian (RIVN) stock chart over the past 12 months (Source: TradingView)

With Rivian’s stock currently around $11 per share, the target suggests over 45% upside potential. Rivian shares have slipped over 47% through the first three months of 2024 following. RIVN shares hit an all-time low last month following a double analyst downgrade and plans to trim 10% of its workforce.

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Rivian R2 teaser (Source: Rivian)

A substantial opportunity ahead

Although Rivian’s pace slowed in Q4 with 13,972 vehicles delivered, the EV maker anticipated it. CFO Claire McDonough said Rivian expected “a more significant gap between production and deliveries in Q4.” This was due to Amazon limiting intake during the holiday season.

Rivian reported a gross loss of $606 million in the fourth quarter, an improvement from the $1 billion loss last year. However, it was still up from (-$477 million) in Q3 and (-$412 million) in Q4.

Q3 ’22 Q4 ’22 Q1 ’23 Q2 ’23 Q3 ’23 Q4 ’23
Rivian loss per vehicle $139,277 $124,162 $67,329 $32,594 $30,500 $43,372
Rivian loss per vehicle by quarter

Gross margins also slipped to (-46%), equaling out to a $43,372 loss on every vehicle delivered between October and December.

Although that’s still a significant loss, it’s a substantial improvement from the over $124,000 loss per vehicle in Q4 2022.

Rivian-shift-EV-plant
Rivian production at its Normal, Ill facility (Source: Rivian)

Rivian will introduce new engineering and supplier upgrades during the planned shutdown at its Normal, Illinois EV plant in Q2 that will “meaningfully reduce” material costs exiting 2024. The EV maker projects a “modest growth profit” by the end of the year.

Due to the upgrades, Rivian expects to deliver around 57,000 vehicles this year, about the same as last year.

Rivian-R2-teaser
Rivian R2 teaser (Source: Rivian)

Rivian believes the “opportunity ahead is substantial” as it expands the brand. Check back later today for all the details of Rivian’s new R2.

Electrek’s Take

Although there are concerns about Rivian’s dwindling cash reserve, McDonough said the company remains “confident that our cash, cash equivalents, and short-term investments can fund our operations through 2025.”

Over the long term, Rivian sees a clear path to its projected 25% gross margin target and roughly 10% free cash flow margin target.

Rivian has already established itself as an authentic luxury EV brand. The R2 will help it expand into new markets, even Europe and potentially others. A quick skim through online forums shows Rivian already has fans overseas.

The smaller electric SUV will be built at Rivian’s new $5 billion GA EV facility. Rivian’s second EV manufacturing plant is expected to begin production in 2026.

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