Rivian Stock Price Forecast April 2022 – Time to Buy RIVN Stock?

While Rivian (RIVN) stock has bounced back from its 2022 lows, it is still down almost 60% so far in the year and is underperforming the markets as well as EV (electric vehicle) peers this year.

The company, which is backed by Amazon and Ford, went public last year and raised around $13.7 billion, which made it the biggest IPO of the year and the largest since Facebook’s 2014 listing. What’s the forecast for Rivian stock and is it a good buy in April 2022?

Rivian had a blockbuster IPO

Rivian’s IPO sailed through easily and the company priced the shares at $78 each, which was above the already increased price range. The stock had a good listing and went on to hit an all-time high of $179.47, which was over twice the IPO price.

At its peak, RIVN commanded a market cap of over $150 billion. Many saw it as a sign of optimism toward pure-play EV companies. However, there were skeptics, which included Tesla’s CEO Elon Musk, who found the valuation too high. Musk, who uses his Twitter account brilliantly to connect with his millions of followers, mocked the high valuations of Rivian.

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RIVN stock recent developments

Rivian produced 2,553 electric cars in the first quarter of 2022 and delivered 1,227 cars. It started delivering its vehicles only in September 2021 and produced only 1,015 vehicles in the year. Meanwhile, the company has maintained its 2022 production guidance of 25,000 units. To put that in perspective, Tesla is expected to deliver over 1.3 million vehicles in the year.

In the fourth quarter of 2021, Rivian had reported revenues of $54 million which were below the $60 million that analysts were expecting. Its adjusted loss per share of $2.43 was also higher than the $1.97 that analysts were expecting. Being a startup EV company, which is investing in growth, no one really expects RIVN to turn profitable anytime soon. However, the worse than expected losses have been making markets apprehensive especially given the current macroeconomic backdrop where loss-making growth stocks have been out of favor with investors.

RIVN is a cash-rich company

Thanks to its massive IPO and the strong cash position even before the IPO, RIVN has a strong balance sheet and holds around $18 billion as cash and cash equivalents. Given its market cap of around $38 billion, the cash is just under half of its market cap. The company is using the cash for its capex and expects to spend $2.6 billion on capex in 2022.

In December only, Rivian announced its second plant in Georgia. The plant would have an annual capacity of 400,000 vehicles and the construction is expected to begin in 2022. The company expects to roll out vehicles from the plant, which would be built at a cost of $5 billion, in 2024. It is also increasing the nameplate capacity of its Illinois plant to 200,000 vehicles annually.

RIVN models

RIVN currently has three certified models in the US. These include the R1T, R1S, and EDV. The company has the first-mover advantage in the electric pick-up market and Ford would start delivering the all-electric version of its F-150 pickup later this year. Rival Tesla has delayed the launch of its Cybertruck to 2023 as the company looks to boost the production of existing models amid the global chip shortage.

Rivian announced a price hike

Rivian had announced a price hike recently. The company is not alone and several automakers including Tesla and Xpeng Motors have had to increase prices amid the rise in input costs. However, RIVN’s announcement received pushback from customers as it had also increased the prices for customers who had pre-booked the vehicles.

Later the company had to backtrack and said that it would not increase the prices for those customers who have booked the vehicle before the price hike announcement. In his public letter, RIVN’s CEO RJ Scaringe said, “As we worked to update pricing to reflect these cost increases, we wrongly decided to make these changes apply to all future deliveries, including pre-existing configured preorders. We failed to appreciate how you viewed your configuration as price locked, and we wrongly assumed the announced Dual-Motor and Standard battery pack would provide configurations that would deliver price points similar to your original configuration.”

RIVN stock price forecast

Wall Street analysts meanwhile look quite bullish on RIVN stock. Of the 16 analysts covering RIVN, 10 have a buy or equivalent rating while five have a hold rating. One analyst has rated the stock as a sell. Its median target price of $84 is almost double the current stock price. The street low target price of $40 is a discount of 5% while the street high target price of $140 is a premium of 232%.

Earlier this year, Morgan Stanley analyst Adam Jonas, who is among the most prominent Tesla bulls, issued a bullish note on Rivian also. He said, “While Rivian is at a far earlier stage in its industrial journey than Tesla, we do not see this company as just a ‘concept stock’ either. The road to ramping production will be choppy, but we expect largely due to supply rather than demand.”

Notably, Jonas is bearish on Lucid Motors even as he is otherwise optimistic about the outlook for EV companies. He also sees Apple’s expected entry into the EV industry as a risk for incumbents.

Rivian stock long term forecast

The long-term forecast for RIVN stock looks positive looking at the expected demand growth for EVs. If the company can scale up production, it can be a worthy competitor in the EV industry. Association with Amazon and Ford is another positive for Rivian.

Should you buy Rivian stock?

Rivian is a high-risk bet on the EV transition. Ramping up production hasn’t been easy for startup EV companies and many have faltered. To justify its valuations. RIVN needs to scale up the production and deliveries quite fast. That hasn’t been easy for startup EV companies and even Tesla had faltered on the execution, especially during the ramp-up of Model 3.

However, since then, the company has impressed even the most bearish of analysts with its impeccable execution. If Rivian can execute the production the way Tesla did, RIVN stock could be a good long-term winner.

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