Rivian Stock Has 135% Upside, According to 1 Wall Street Analyst

Rivian Stock Has 135% Upside, According to 1 Wall Street Analyst

Investors in Rivian Automotive (NASDAQ: RIVN) suffered staggering losses last week after the maker of electric trucks, vans, and SUVs reported mixed earnings Wednesday.

The news wasn’t all bad. For one thing, Rivian reported sales ahead of analyst targets at $1.32 billion, and its earnings weren’t much worse than expected at $1.36 per share. However, management told investors that Rivian will only produce 57,000 electric vehicles in 2024 — about as many as it produced in 2023. Investors who thought they were buying a growth stock were understandably disappointed when Rivian told them it doesn’t plan to grow at all — and sold off the stock, down 38% through the end of the week.

Well … most investors were disappointed. As it turns out, analysts at Bank of America remains doggedly optimistic about Rivian and its chances, reiterating its “buy” rating on the stock, and setting a $25 price target on Rivian.

Is Rivian stock really a buy?

Pointing to Rivian’s better-than-expected revenue in Q4, and not-much-worse-than-feared losses, Bank of America declared Rivian’s quarter actually “relatively good.”

Now, BofA isn’t living in an entirely different reality from the rest of us. The banker did acknowledge that Rivian’s production forecast for 2024 was weak, and the banker lowered is price target accordingly, from $40 a share before earnings to $25 after. Still, even this lower price target implies that Rivian shares will more than double — actually, rise by almost 135% — over the next 12 months. And that’s a pretty aggressive target for a stock that just disappointed its investors.

Is it achievable?

I don’t think so, no. Rivian’s once-magnificent bank account has shrunk to just $9.4 billion, and it’s carrying $5.1 billion in debt. The company burned $5.9 billion in cash last year, and if production this year is identical to last — will probably burn $5.9 billion more this year. Before 2024 is out, the company will probably owe more cash than it’s got, and by the end of 2025, probably be out of cash entirely.

That doesn’t sound like a “buy” to me.

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bank of America. The Motley Fool has a disclosure policy.