Monday (NASDAQ:MNDY), Mizuho (NYSE:MFG) issued a new price target for Rivian Automotive Inc (NASDAQ:RIVN) shares, reducing it to $11.00 from the previous $12.00, while maintaining a Neutral stance on the stock.
This adjustment follows Rivian's report of lower than expected revenue for the September quarter, with earnings at $874 million compared to the consensus estimate of $982 million. The electric vehicle manufacturer managed to deliver approximately 10,000 vehicles and produced 13,200 units during the period.
The company has confirmed its revised full-year 2024 production forecast of around 48,000 vehicles, which is a 17% year-over-year decrease. Despite this reduction, Rivian anticipates delivery growth in the low single-digit percentage range year-over-year, aligning with the consensus expectation of a roughly 1% increase.
Rivian also reiterated its goal to achieve a positive gross margin by the fourth quarter of 2024. This optimism is supported by several strategies, including expedited depreciation of equipment over two to three years, reductions in material costs, and increased revenue per vehicle.
Significantly, Rivian has managed to decrease its cash burn by 8% year-over-year. This reduction is attributed to lower delivery numbers and parts shortages, particularly from its Enduro motors. In a positive development for the company's future offerings, Rivian has secured a supply of 4,695 cylindrical batteries from LG, which will be used to power the upcoming R2 model at its launch.
In other recent news, Rivian Automotive Inc has been the subject of significant developments. Investment firm Stifel adjusted its price target for Rivian to $16 from $18, while maintaining a Buy rating. Stifel's analysis is grounded in Rivian's projected cash flows and investment risks, and the firm expects Rivian to achieve positive gross profit by Q4 2024.
Rivian's recent Q3 results revealed the company generated $874 million in revenue, despite supply chain challenges that impacted production. The company produced 13,157 vehicles and delivered 10,018 units, but reported a gross loss of $392 million. Rivian's annual production guidance remains at 47,000 to 49,000 vehicles, with expectations of a modest gross profit in Q4.
The company has revised its 2024 adjusted EBITDA guidance to a loss of $2.825 billion to $2.875 billion. A joint venture with Volkswagen (ETR:VOWG_p) is anticipated to support growth and lead to future positive cash flow. Rivian also plans to launch the R2 program in 2026, targeting significant cost reductions. These recent developments underscore Rivian's potential for growth despite ongoing challenges.
InvestingPro Insights
Rivian's financial landscape, as revealed by InvestingPro data, offers additional context to Mizuho's price target adjustment. The company's market capitalization stands at $10.81 billion, reflecting investor sentiment amidst challenging market conditions.
Rivian's revenue for the last twelve months as of Q3 2024 reached $4.55 billion, with a year-over-year growth of 20.33%. However, this growth is tempered by a significant quarterly revenue decline of 34.63% in Q3 2024, aligning with the lower-than-expected earnings reported in the article.
InvestingPro Tips highlight Rivian's financial resilience, noting that the company "holds more cash than debt on its balance sheet" and "liquid assets exceed short-term obligations." These factors may provide some reassurance to investors concerned about the company's ability to navigate its current challenges. However, the tip that Rivian is "quickly burning through cash" underscores the importance of the 8% year-over-year reduction in cash burn mentioned in the article.
The company's path to profitability remains a key focus, with InvestingPro indicating that analysts do not anticipate profitability this year. This aligns with Rivian's stated goal of achieving a positive gross margin by Q4 2024, as mentioned in the article. The gross profit margin of -43.42% for the last twelve months ending Q3 2024 further emphasizes the challenges Rivian faces in reaching this target.
For investors seeking a more comprehensive analysis, InvestingPro offers 8 additional tips that could provide valuable insights into Rivian's financial health and market position.
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