Wall Street cheered “signs of improvement” for Rivian Automotive Inc., but remained cautious about the stock on worries that the electric-vehicle maker still faces a steep production ramp.
Rivian
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late Wednesday reported a $1.7 billion third-quarter loss, but the stock rallied as the loss was narrower than Wall Street expected.
Sales came in slightly below expectations, and Rivian kept its production guidance for the year intact at 25,000 vehicles.
“We continue to be fans of the truck, but not necessarily the stock,” Davidson analyst Michael Shlisky said in a note Thursday.
The “good news” on the call was mostly expected, the analyst said.
The “unexpected items” that keep Shlisky “cautious” include Rivian’s push-out of its new vehicle platform, the R2, to 2026 and “the sudden suspension of the disclosure of the preorder backlog.”
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Rivian said it had more than 114,000 preorders for its vehicles in the U.S. and Canada as of Monday, but it won’t report those numbers going forward.
“(Rivian) also believes it has the cash to carry all the way to 2025, but we believe a lot has to go right from here,” Shlisky said. The analyst kept the equivalent of a sell rating on Rivian stock.
Joseph Spak with RBC Capital struck a similarly cautions tone. There were “signs of improvement but (production) ramps aren’t smooth,” Spak said.
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The delay of the R2 platform launch could bring some “near-term noise,” Spak said. The analyst lowered his price target on Rivian to $50, from $61, representing a 52% upside for the stock from Thursday prices.
Postponing the R2 platform launch to 2026 may have been “unwelcomed news,” Emmanuel Rosner with Deutsch Bank said, but Rivian is likely to be “making the change to ensure appropriate time to go through the ramp-up phase, allowing it to leverage learnings from R1 and (delivery van) platforms.”
“All in, we believe Rivian is showing encouraging near-term operational traction and making proactive updates to capital allocation in order to preserve cash, which should continue being welcomed positively by investors,” the analyst said. Its “progress on gross margin is also particularly encouraging.”
Rosner kept a buy rating on the stock and tweaked his price target to $43, from $44.
Dan Ives at Wedbush zeroed in on the production expectations for 2022, saying that Rivian “is navigating a very complex supply chain in an impressive way.”
“We are cautiously optimistic that many of the headaches in the Rivian story are starting to be in the rear view mirror,” Ives said. “We believe this story is still only in the very early innings of playing out with the production piece now really starting to be in place heading into a very important year ahead as the EV arms race plays out.”
Ives kept the equivalent of a buy rating on the stock but also lowered his price target, going to $37 from $45.
Shares of Rivian have lost 69% this year, compared with a decline of about 18% for the S&P 500 index.
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