Rivian Gaining Bullish Sentiment After Difficult Start To Public Life

Rivian Automotive (NASDAQ: RIVN), known for its electric pickups, SUVs, and delivery vans, has been on a mostly downwards path since going public over three years ago. The company's initial public offering (IPO) was at a price of $78, and with the stock spending 2021 comfortably above $100 the decline to the current level $14.37 has come with at least a couple of false dawns.

Taking a look at the full chart above paints a pretty daunting picture, yet the 6 month chart below looks more like a stock that is trying to break into bullish territory off recent lows. The July spike came off the back of Volkswagen news which we will delve a little deeper into further down, but the rally came to an abrupt halt in the high $18 range, with the pull of the $17 resistance also seen in February proving difficult to break.

The pullback this time around found plenty of willing support at $10, which is a marked improvement from the earlier May low's, the 52 week low of $8.26. Now the question as to whether Rivian's stock price can continue to build some bullish steam and break $17 and hold it, flipping into support is moving to the fore.

Fundamentally, there has been progress. In 2022, Rivian's production levels were challenged, with production and deliveries more than 50% short of their targeted 50,000 vehicles. in large part down to supply chain constraints and macroeconomic challenges. By 2023, Rivian improved its output by resolving supply chain issues, resulting in the production of 57,232 vehicles and deliveries of 50,122 units, a more than doubling year-on-year.

Looking ahead, Rivian projects a production of 47,000 to 49,000 vehicles and expects to deliver low single digit % gains in vehicles in 2024. The anticipated slowdown in production is due to a temporary shutdown for plant upgrades and new supply chain issues. Despite these challenges, the company remains committed to long-term growth and plans to release new vehicle models, like the R2 SUV in 2026, and the R3/R3X SUVs between 2026 and 2027.

The company's strategic partnerships, such as a joint venture with Volkswagen, indicate a collaborative approach to developing new electric vehicle architectures, with Volkswagen investing up to $5 billion over two years. Furthermore, Rivian plans to triple its production capacity by constructing a new $5 billion plant in Georgia by 2028. To support this expansion, Rivian secured a $6.6 billion conditional loan from the U.S. Department of Energy for plant construction.

Analysts predict that Rivian's revenue will grow at a 21% compound annual growth rate (CAGR) from 2023 to 2026. The company expects its gross margin to turn positive by the fourth quarter of 2024 as it aims to streamline production and reduce workforce expenses.

Recently, Benchmark began their coverage on the stock with an $18 price target, and a Buy rating. The firm see's Rivian as being “well positioned to gain significant share of a massive market opportunity in the coming decade.”. Goldman Sachs have also raised in the last week from $12 to $13, but maintaining a Neutral view.

Rivian continues to navigate through industry challenges and competitive pressures while positioning itself as a prominent player in the electric vehicle market. The company's focus on enhancing production capacities, broadening its vehicle lineup, and strategic investments underscores its commitment to achieving long-term growth and profitability.