Rivian Stock Falls as Analysts Lower Their Estimates Because Production Is Taking Longer

Rivian Stock

Rivian Stock (NASDAQ:RIVN)

Rivian Automotive (NASDAQ:RIVN) fell by 14.20% after the electric vehicle manufacturer’s projection for the whole year shook the confidence of investors and experts.

Morgan Stanley’s price objective dropped from $28 to $26 on Wall Street, although the firm maintained its Overweight rating.

According to analyst Adam Jonas, RIVN’s fourth quarter showed progress in cost management. Still, the estimate for FY23 was disappointing regarding output, gross margins, and cash usage. RIVN is expected to demonstrate that it can achieve gross margin breakeven in FY24. Hence the company views FY23 as a critical year for the company.

Rivian’s revised aim of positive 2024 gross margins was met with skepticism by Wells Fargo, as expressed in a statement. With the gradual increase in workload, “cash burn” was also mentioned as a significant worry. The company maintained its Equal-weight rating for Rivian stock and its price target of $18.

Meanwhile, Wedbush Securities reduced its price estimate for Rivian (RIVN) for the next 12 months from $37 to $25 to reflect the company’s slower growth trajectory. Analyst Dan Ives stated that Rivian is making progress and will learn from its manufacturing issues going forward with the demand that still appears to be holding up. However, he warned that the cash burn situation at Rivian puts more pressure on the 2024-2025 timelines. It is not out of the question for the company to conduct additional capital raises.

Apart from that, Baird decreased its price goal from $44 to $35, D.A. Davidson decreased its price target from $23 to $16, and RBC Capital decreased its price target from $50 to $28.

Bill Maurer, a writer for Seeking Alpha, gave the updated negative case on RIVN. JR Research, a contributor to Seeking Alpha, detailed why investors may still be optimistic.

Rivian executives said on the results call that supply chain challenges may continue during the first half of the year before improving in the second half. Have a look at the whole transcript of the earnings call.

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