Less than six months after its spectacular market debut, EV maker Rivian (NASDAQ:RIVN) is trading at an all-time low, despite Wall Street analysts still rating the stock a buy. Should you buy the dip or stay away?
From IPO Darling to New Low
Since January, Rivian’s stock has plunged 58%, significantly more than its U.S. peers. In comparison, Lucid (LCID) has fallen 33%, Fisker (FSR) 23% and Tesla 13%. The S&P 500 Index has slid 6%.
That said, Rivian also fell from a high perch. Rivian shares rocketed following its initial public offering on Nov. 10. The stock came public at $78 per share in a deal that raised nearly $12B and gave Rivian a market cap of roughly $67B. Backers of Rivian, which has focused on building “adventure” EVs like pick-up trucks and sports utility vehicles, include Amazon and Ford.
Buyers stepped in immediately after the stock's debut. RIVN soared to a 52-week high of $179.47 on Nov. 26 but turned around from there. The stock has since tumbled to a 52-week low of $33.46 on March 15.
Shares were particularly hard hit by the company’s Q4 earnings report on March 10, which fell short of expectations.
Further spooking investors was news that the company now expects to ship 25K vehicles in 2022, significantly fewer than the roughly 40k forecasted by analysts. Rivian management attributed the shortfall largely to ongoing supply chain issues for parts such as semiconductors. For the year 2021, the company said it produced 1,015 vehicles and delivered 920.
A few days later, on March 14, Rivian announced it had hired veteran auto executive Frank Klein as its new chief operating officer. Klein was most recently president of Magna Steyr, the Austrian unit of contract auto manufacturing giant Magna International (MGA), which counts Rivian rival Fisker as a client. Despite the announcement, Rivian shares hit an all-time low on March 15.
Is RIVN a Buy?
Wall Street analysts, on average, still rate the stock a Buy. Of the 15 analysts tracked by SA, seven rated the stock a Strong Buy, four a Buy, four a Hold and none rated it a Sell. SA authors, meanwhile, rate the stock a Sell, on average.
In notes issued after the company’s Q4 earnings, analysts said that while they were somewhat surprised by the magnitude of Rivian’s production shortfall, they remained optimistic about its future.
“Despite what seems to be a tougher 2022 than initially envisioned, our Buy rating on RIVN is predicated on our view that the company is one of the most viable among the start-up EV automakers and also a relative threat to incumbent automakers,” wrote BofA Securities analysts, who maintained their Buy rating on the stock and price objective of $140.
Meanwhile, Barclays analysts maintained their Equal Weight rating while it lowered their price target to $42 from $47.
“Rivian’s differentiated consumer branding centered around adventure makes it unique in the EV market and provides a solid foundation for recurring revenues,” wrote Barclays analysts. “We are confident that RIVN can grow into a major, multi-product OEM. As much of this is already priced in, we are equal weight in the shares.”
Piper Sandler analysts were also upbeat, maintaining their Overweight rating while reducing their price target to $130 from $148.
“Rivian’s backlog and order rates are resilient, despite price hikes, and if not for supply chain hiccups, Rivian would be capable of building 50k units this year,” wrote Piper analysts. “Bottom line: supply chain problems are temporary; they do not constitute a reason to sell the stock.”
Wedbush analysts, however, were more pessimistic, slashing their price target to $60 from $130, while maintaining their Outperform rating.
“Since its IPO in late 2021, the Rivian story has been a bad episode out of the Twilight Zone for the Street,” Wedbush analysts wrote. “This EV pick-up truck/sport utility visionary story needs to start its execution engines in 2022, otherwise competition from Ford, GM, Tesla, and many others will go after its potential EV customer base into 2023.”
Comments