Rivian (RIVN) stock is trending on analyst prediction of ‘massive’ EV market gains

Rivian’s (RIVN) stock is trending again after the EV maker earned a big analyst upgrade on Monday. With a “massive market opportunity” ahead of it, Rivian may have what it takes to be a real player in the EV market.

Rivian stock bounces after analyst praise

With a unique brand, differentiated tech, and backing from Amazon and Volkswagen, Rivian stands out from the EV startup crowd.

According to Benchmark Securities, Rivan has the potential to capture a significant share of the “massive market opportunity” over the next few years.

The analyst firm initiated coverage on Rivian stock with a Buy Rating and $18 price target (via Barrons), suggesting a potential 28% upside from its previous $14 closing price.

After shutting down its Normal, IL plant in April for several months for upgrades, Rivian’s production is expected to pick up. This will help drive down selling prices while improving margins. Benchmark also highlighted Rivian’s expanding charging network.

In a note to investors, the firm pointed out that “of the EV newcomers, Rivian appears particularly well positioned with contracts from Amazon and Volkswagen.”

The next growth stage

Rivian also has “sufficient financial liquidity,” Benchmark said, as it improves profitability. Not including the recent $6.6 billion DOE loan for its plant in Georgia, “RIVN has sufficient capital to reach cash flow breakeven, by our estimates,” the note to investors stated.

The company is already seeing significant material cost reductions after launching its second-gen R1 models in Q2.

Rivian ended the third quarter with $6.7 billion in cash and equivalents, including a $1 billion convertible note from Volkswagen as part of its new joint venture.

Benchmark expects Rivian “to continue to reduce material costs, leverage fixed costs, and scale revenues” with the gen-2 vehicles and then further with R2.

Rivian is expected to launch the smaller R2 in 2026. Starting at $45,000, the electric SUV is poised to attract new buyers as it expands into new markets. It will initially be built in Normal, but Rivian will expand production with a new plant in Georgia.

The EV maker expects to build between 47,000 and 49,000 vehicles this year. Following the shutdown, Rivian can build up to 150,000 vehicles at its plant in Normal. After the R2 launches, Rivian expects production capacity to be around 215,000, with R2 accounting for 155,000 units alone.

Rivian’s partnership with Volkswagen will be a “landmark development for the industry,” according to CEO RJ Scaringe. The total deal is worth up to $5 billion, a “meaning financial opportunity,” Scaringe said.

Rivian’s stock is up almost 13% on Monday following the new analyst coverage. Although RIVN shares are up 40% over the past month, they are still over 30% in 2024.