Rivian Stock (NASDAQ: RIVN) Pulling Back As Earnings Beat & Analysts Price Targets Rise

Electric vehicle manufacturer Rivian Automotive stock price (NASDAQ: RIVN) has experienced a notable pullback in recent days, despite bullish movements from analysts. RIVN stock is trading down 9.5% over the past 5 trading sessions, with the action on today's pre-market a little under $14, down almost 6% despite earnings coming in slightly above expectations.

First let's take a look at earnings. Revenue was reported at $1.158bn against a consensus of $1.13bn, whilst EPS also beat, with -$1.13 reflecting an improvement on the expected -$1.19. Despite the beat on revenue and EPS, markets have reacted to the downside. Commentary from the firm was bullish.

“The second quarter has been a defining one for Rivian. We have demonstrated strong execution during the quarter with the plant retooling upgrade and launch of second generation R1 vehicles. The changes we made to the R1 platform have allowed us to reduce material and manufacturing costs, while simultaneously improving performance and capabilities. As a testament to our industry-leading technology stack, we also recently announced our proposed JV with Volkswagen Group.”

RJ Scaringe, Rivian Founder and CEO

From the analyst community, raises have by and large been the order of the day in recent times. Truist have raised their price target on Rivian from $13, to $16 but maintain a Hold rating. Wells Fargo increase from $10 to $18, remaining Equal Weight. Mizuho have also raised but remain Neutral.

Mizuho Securities raised the price target on the stock but has broadly done so in line with current price action. Mizuho analyst Vijay Rakesh increased Rivian's target from $11 to $15 while maintaining a “neutral” rating. This adjustment comes amidst the backdrop of Rivian's performance exceeding analyst expectations, with the company delivering 13,790 vehicles in June, surpassing the estimated 11,500.

Despite the uplift in the short term, Rivian’s forecast for 2024 suggests a tempered outlook, with delivery guidance indicating low single-digit growth. This is notably short of average analyst expectations which were set at a 6% growth rate. In 2023, Rivian managed to produce 57,232 vehicles and successfully delivered 50,122 of these. Looking ahead, the company plans a production target of 57,000 vehicles for 2024.

Cost reduction efforts are underway at Rivian, as CEO RJ Scaringe targets a 20% decrease in material costs for the company’s second-generation R1 platform. The future R2 platform is expected to see an even more significant cost reduction, aiming at 45%. These initiatives are part of Rivian’s strategy to improve the affordability and profitability of its vehicle lineup.

Rivian's financial health has also been bolstered by an investment from Volkswagen, with the German automaker injecting up to $5 billion into the electric truck maker. This move is expected to enhance Rivian's liquidity and strengthen the company's balance sheet significantly.

Looking to the future, Rivian is gearing up for the launch of its R2 vehicle, which carries a price tag of $45,000 and is expected to begin deliveries in the first half of 2026. This new model could play a crucial role in Rivian's growth trajectory and competitiveness in the EV market.

Rivian's efforts to ramp up production, reduce costs, and expand its product offering seem to be paying off as reflected in the investor sentiment and Mizuho's revised price target. With continued innovation and strategic partnerships, Rivian appears to be on a path that could solidify its position in the burgeoning electric vehicle industry.