Rivian (RIVN:NSD) has emerged as a major player in the electric vehicle (EV) market, having produced 25,000 vehicles in 2022. However, according to Adam Jonas of Morgan Stanley, Rivian is less efficient than Tesla (TSLA:NSD), and this inefficiency is affecting its margins.
Jonas notes that while Rivian aims to produce 50,000 vehicles in 2023, he expects the company to post a negative gross margin of 68%. In comparison, when Tesla produced over 50,000 units in 2015, it delivered a positive gross margin of 21.3% (excluding credits).
Although Jonas points out that the operating environment has changed significantly, with increased competition and higher lithium prices adding to Rivian’s challenges, he maintains a Buy recommendation on Rivian stock. His price target of $26 implies a potential upside of 96.82% from current levels.
Rivian Stock-Analyst Ratings:
Other analysts are cautiously optimistic about Rivian stock. The company’s focus on ramping up production and reducing costs is promising for growth, but near-term margin pressures and heightened competition remain concerns. Of the analysts covering Rivian stock, 13 rates it as a Buy, four as a Hold, and two as bearish. The consensus rating is a Strong Buy, with an average price target of $36.16, implying an upside potential of 112.79%.
However, hedge funds sold 18.2 million shares of RIVN in the previous quarter, indicating a lack of confidence in the company. Rivian stock scores a three on the Smart Score system, suggesting that it is more likely to underperform the broader markets.
Company Profile:
Rivian Automotive, Inc. designs, develops, manufactures, and sells electric vehicles and accessories. The company offers five-passenger pickup trucks and seven-passenger sports utility vehicles.
It provides Rivian Commercial Vehicle platform for Electric Delivery Van in collaboration with Amazon.com, Inc. The company sells its products directly to customers in the consumer and commercial markets. Rivian Automotive, Inc. was founded in 2009 and is based in Irvine, California.
