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Will Rivian Stock Hit $150 in 2022?

By Rekha Khandelwal – Dec 30, 2021 at 9:02AM

Key Points

  • Rivian is prioritizing pickup trucks with standard battery packs for delivery.
  • Industry tailwinds as well as product quality should support Rivian's growth.
  • Rivian stock may remain volatile in the near term.

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After a solid launch, the EV maker's next challenge is to produce and deliver vehicles.

The electric vehicle (EV) market is an interesting one right now. The demand for EVs far exceeds the supply. Companies that can deliver quality electric vehicles have a ready market for them. In many cases, interested buyers are waiting for several months before they get the delivery of their dream EV. Several auto makers, old and new, are trying to fill the gap here.

What does this mean for Rivian (RIVN -2.28%), which delivered the first electric pickup truck ever in September 2021? Let's discuss that next.

Rivian is focusing on production

As of Dec. 15, Rivian had produced 652 vehicles, and delivered 386. The company targeted 1,200 vehicle deliveries for 2021, and the numbers so far suggest that it will fall a little short of that target. However, the company remains confident of meeting its long-term production goals.

Person standing beside a 2022-Rivian-R1S.

Image source: Rivian.

Rivian is expanding the capacity of its Illinois factory from 150,000 vehicles to 200,000 vehicles a year. Additionally, it has announced a second factory in Georgia, with a capacity of 400,000 units a year. The company expects to start production in this facility in 2024.

Rivian recently communicated its intention to prioritize delivery of pickup trucks with a standard battery, which offer a range of 314 miles. Trucks with a bigger battery pack, which can go 400 miles on a single recharge, are planned for delivery in 2023. Rivian expects to deliver its 55,000 pre-orders (as of Oct. 31) by the end of 2023. The decision to prioritize delivery of trucks with standard battery packs doesn't affect that expectation. The company's pre-orders rose to 71,000 as of Dec. 15.

Rivian's other key priorities include developing its next vehicles, advancing its battery technology, and developing its own charging network. All in all, the company is working to establish itself as a leading EV player for the long term.

Partnership with Amazon

A couple of factors may help Rivian establish itself. First, the company is a first mover in the electric pickup truck segment. That has helped it secure significant pre-orders for its vehicles. Second, Rivian's pickup truck has gotten positive reviews from users and media for its quality.

Finally, an order of 100,000 delivery vans from Amazon (AMZN -0.09%) will provide Rivian a regular revenue stream through at least 2025. Amazon also held a roughly 20% stake in Rivian, as of Sept. 30. 

With a focus on pickup trucks, SUVs, and delivery vans, Rivian is targeting some of the highest-volume and most profitable auto segments. Leading logistics and e-commerce companies are shifting to EV fleets, as they expect increasing regulatory requirements for the same.

How may Rivian stock fare in 2022?

Predicting stock prices, especially over short time frames, is difficult. If Rivian manages to achieve its production targets in the upcoming couple of quarters, its stock has a fair chance of reaching to $150. This expectation assumes continued momentum and high valuations for EV stocks, as seen in 2021.

Of the 14 Wall Street analysts covering Rivian stock, 10 are bullish on the stock, while four are neutral. Wall Street analysts' consensus price target for Rivian stock is around $135.

Chart showing fall in Rivian's price and price target in late 2021.

RIVN data by YCharts

Having said that, more than short-term price targets, investors should focus on the long-term strengths of a company while making an investment decision. Rivian looks well-placed to grow in the long term.

However, the company is at a very early stage right now. Although its stock looks promising, it faces significant risks. How the company's electric trucks and SUVs will fare compared to upcoming products from competitors remains to be seen.

Rivian can hope to retain its lead, if its trucks turn out to be comparable to or better than upcoming offerings from more established companies, including Tesla, Ford, and General Motors. If that happens, Rivian's stock could soar further.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Rekha Khandelwal has no position in any of the stocks mentioned. The Motley Fool owns and recommends Amazon and Tesla. The Motley Fool recommends the following options: long January 2022 $1,920 calls on Amazon and short January 2022 $1,940 calls on Amazon. The Motley Fool has a disclosure policy.

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