In 2024, Rivian Automotive (NASDAQ:RIVN) stock and many of its early-stage EV peers struggled, with some hitting record lows.
Indeed, industry leader Tesla (NASDAQ:TSLA) has also lagged until recently. However, Tesla rebounded and is now performing well, while RIVN stock has more than doubled from its lows.
This move has been driven by a key $5 billion strategic partnership with Volkswagen (OTCMKTS:VWAGY).
Additionally, Rivian’s Q2 deliveries surpassed expectations, and the company reaffirmed its 2024 production target of 57,000 vehicles. This news was clearly positively received by investors amid industry turmoil. With valuations at low levels, Rivian’s stock reacted strongly to these positive developments.
However, investors largely remain cautious around Rivian’s future prospects for continued growth in 2024.
After all, this is a company that has continued to see big operational and production-related challenges. Let’s dive into what to make of the recent impressive move in RIVN stock.
Mizuho Raises RIVN Stock Price Target
Rivian Automotive closed the week up 10%, surpassing $18, after Mizuho raised its price target to $15.
Rivian stock closed above $17 per share in recent days, despite Mizuho’s $15 price target and neutral rating. That’s an impressive move from the stock’s low around $8 per share seen recently.
Analyst Vijay Rakesh highlighted a 9% year-over-year delivery increase, reaching about 13,800 EVs, surpassing forecasts and reducing inventory significantly.
Rivian’s strong sales and Volkswagen’s $5 billion investment improved its cash flow outlook. While still unprofitable, Rivian’s balance sheet strengthened, reducing liquidity risks.
The company is now positioned to potentially become a profitable EV manufacturer, giving shareholders reason for optimism.
Impressive R1T Performance
Amid slowing U.S. EV sales growth, consumer sentiment is crucial. Over 40% of EV owners plan to switch to combustion-engine vehicles. Investors should note Edmunds’ recent EV tests, which revealed positive insights for Rivian Automotive.
Edmunds tested nine EVs in real-world conditions, and the Rivian R1T stood out positively. It impressed testers, many of whom would buy it again, providing good news for Rivian investors amid concerns about consumer shifts to gasoline vehicles.
Edmunds praised the 2022 Rivian R1T for its real-world performance. Rivian also updated the vehicle with hardware and software improvements while launching new premium trims.
These enhancements aim to boost margins and profitability, even with flat delivery expectations. With the refreshed R1 ready, Rivian is now focused on producing the affordable R2 models, crucial for its future growth.
I’m Still Cautious on RIVN Stock
Rivian Automotive initially focused on sports cars but shifted to electric trucks and SUVs in 2015. After acquiring Mitsubishi’s plant in Illinois in 2017, Rivian faced challenges in the ongoing EV slump, yet its luxury market focus yielded mixed results.
While the company’s recent partnership with Volkswagen and other key performance reports certainly improves the company’s outlook, the reality is that Rivian has plenty of headwinds to battle to provide meaningful long-term upside for investors.
Until production issues are sorted out, this is a company I’m going to remain on the sidelines with. Of course, that could change over time, and the company is making strides in the right direction. But for now, I think being safe is better than being sorry.
On the date of publication, Chris MacDonald did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.