Rivian has few catalysts in 2024 beyond its new SUV, but longer-term story is intact, analysts say
Rivian Automotive Inc. is staring down a challenging 2024 with few catalysts beyond the unveiling of its new midsize SUV, the R2, in the coming weeks, but the EV maker’s longer-term story remains intact, analysts said Thursday.
Baird analyst Ben Kallo said he’s sticking with an outperform rating on the stock
RIVN,
after disappointing earnings released late Wednesday, showing a larger-than-expected quarterly loss and guidance that implies it will produce fewer cars than in 2023.
The company said it would make 57,000 EVs this year, compared with the 57,232 EVs produced in 2023. Wall Street estimates for 2024 production hover around 66,000 vehicles to 68,000 vehicles.
The company plans to cut operational costs and apply what it has learned to its new factory in Georgia, which is slated to start production in 2026.
Production guidance “was underwhelming” with significant changes to its manufacturing facility ahead, Kallo wrote in a note to clients. The company has been upfront about its manufacturing issues for several quarters and a quarterly decrease was expected, he wrote.
Read also: Rivian can’t avoid the ‘EV winter,’ Barclays warns in downgrade of its stock
“However, the degree of the impact was more severe than our/Street estimates, and we believe will pressure shares in the near term,” said the note.
The company has several areas for cost reductions, and it’s investing for a strong long-term setup. “We continue to like the product, brand, and management, but are removing (the stock) as a Best Pick for 2024,” Kallo wrote.
Rivian’s stock was down 14% premarket, tracking its after-hours move. The company said high interest rates and economic pressures had informed its outlook for 2024.
“Economic and geopolitical uncertainties and pressures, most notably the impact of historically high interest rates, have informed our expectations for 2024,” the company’s executives said in a letter to shareholders announcing the results.
Rivian said it’s cutting about 10% of its salaried employees to rein in costs. The company is determined to release the R2 in time and hopes to be as successful with the cheaper EV as it was with its first, Chief Executive RJ Scaringe said on a call with analysts.
Mizuho analysts also stuck with a buy rating on the stock, but lowered their price target to $24 from $30.
The numbers are a further sign that the EV honeymoon is over with headwinds in 2024 that include the sunset of subsidies in the U.S. and Germany and a weaker consumer, wrote analysts led by Vijay Rakesh.
“While we would note Rivian is experiencing similar macro headwinds to the rest of the EV market, we see it as attractive with a good product portfolio focused on SUVs/Pickups while trading at a steep 70%/40% discount compared to peers Tesla/Lucid, respectively,” the analysts wrote.
Rivian is expected to increase revenue by 13% in fiscal 2024 and by 69% in fiscal 2025, said the note. Production is expected to ramp up, it has about $9.4 billion in cash on hand and has a path to profitability in the fourth quarter of 2024, they wrote.
Rivian wasn’t the only EV maker to offer disappointing production guidance on Wednesday. EV startup Lucid Group Inc.
LCID,
guided for 2024 production of only about 9,000 vehicles, having produced 8,428 vehicles last year.
Lucid’s stock was down 8.6% premarket. Tesla Inc.’s stock
TSLA,
was up 0.8%.
Rivian’s stock has fallen 19% in the last 12 months, while the S&P 500
SPX
has gained 24%.
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