A 'messy' quarter: What analysts are saying after Rivian's latest quarterly report
Analysts are growing cautious on Rivian shares as its struggles are worsened by weak electric vehicle demand. “Rivian reported a messy Q4 with worse FCF [free cash flow] vs expectations but more importantly issued 2024 production guidance well below consensus,” RBC Capital Markets analyst Tom Narayan wrote on Wednesday, reiterating a sector perform rating on the stock. RBC has a $15 per share price target, which is roughly 3% below Wednesday’s close of $15.39. Shares of the EV maker were trading more than 26% lower on Thursday, after hitting a 52-week low intraday of $11.06. Investors were disappointed to learn Rivian would produce about 57,000 vehicles this year, far below a consensus prediction of 80,500, according to Barclays. Other estimates called for production of 60,000 to 70,000 vehicles. RIVN 1D mountain Rivian stock. The company reported mixed fourth-quarter results, with a wider-than-expected loss and revenue that was slightly better than expected.It also announced plans to slash 10% of its salaried employees. The disappointing results speak to a broader mix of headwinds troubling EV makers. Consumer adoption has remained sluggish , hurt by a variety of reasons including higher interest rates. At the same time, Rivian is spending big on ramping up production of its R1S sports utility vehicle and R1T truck, and plans to unveil the R2, a midsize SUV, this year. Narayan said legacy automakers are in a better position to navigate the current slowdown in EV demand, and said he expects Rivian stock to “to come under pressure.” Rivian said it lost $1.10 billion before interest, taxes, depreciation and amortization, on an adjusted basis, while analysts polled by FactSet expected EBITDA of -$1.06 billion. “We expect the stock to trade down given the 2024 EBITDA miss & still large gross margin loss per unit,” Wells Fargo analyst Colin M. Langan said, as he reiterated an equal weight rating. Langan lowered his price target to $14 per share from $18. Langan also noted that Rivian’s cash burn rate has ticked higher. He estimates that at the fourth-quarter pace the company would run out of cash in less than eight quarters. Goldman Sachs analyst Mark Delaney also expects shares will remain under pressure in the short-term. “We believe more difficult market conditions for EVs, including on pricing, will be a headwind in 2024 and an overhang on the stock, but we believe Rivian can still improve profitability over the course of the year as it benefits from material cost reductions and vehicle design improvements, as well as growth in software and services,” Delaney said. The firm maintains a neutral rating on the stock and lowered its price target to $13 per share, or about 16% below from Wednesday’s close. It’s prior target was $17. “We believe progress with software & services, given Rivian’s electronic architecture that is over the air update-able and strong brand/growing installed base, will be a key factor in longer-term profitability,” he added. — CNBC’s Michael Bloom contributed to this report.
