What happened
Rivian Automotive (RIVN 6.10%) stock rocketed yet again this morning, surging as high as 15.1% within 15 minutes of the market's opening. The electric vehicle (EV) stock has rebounded so dramatically that it's now up almost 32% in just two days, as of this writing.
Ironically, Rivian is recalling some of its trucks and several analysts have slashed their price targets on its stock, including at least a couple this morning. The market, though, sees tremendous potential in the EV stock after it sank to all-time lows on Wednesday.
So what
Let's start with how the analyst community feels about Rivian right now. Here's a list of just some of the research firms and the new price targets their analysts have assigned to Rivian stock between Wednesday and today:
| Research firm | Old price target on Rivian stock | New price target on Rivian stock |
|---|---|---|
| Barclays | $38 | $24 |
| Deutsche Bank | $90 | $69 |
| RBC Capital | $100 | $77 |
| Wedbush | $60 | $30 |
| Mizuho | $90 | $80 |
| Baird | $84 | $67 |
| Piper Sandler | $112 | $108 |
| Wells Fargo | $40 | $24 |
Data source: TheFly.com. Table by author.
This table goes to show how negative the sentiment in Rivian has turned among analysts ever since the EV maker released its first-quarter numbers on Wednesday after market close.
Yet, if you consider how Rivian shares hit an all-time low of $19.25 a share midweek this week and compare that with the price targets above, it is evident most analysts still see strong upside in the EV stock even after their price target cuts.
Image source: Rivian Automotive.
That's also what investors seem to betting on -- the potential upside in Rivian shares from here, especially after the EV start-up dispelled investors' worst fears late Wednesday when it reported production in line with expectations and reiterated its full-year production outlook of 25,000 vehicles for 2022 despite mounting supply and cost pressures.
Now what
Among several other factors, there's another big one driving investor interest in Rivian: its plans to launch an affordable midsize SUV, R2, to be manufactured at a new plant in Georgia. The state of Georgia recently awarded Rivian incentives worth $1.5 billion to build the plant.
Importantly, Rivian says its cash balance of $17 billion as of March 31 is enough for the company to reach its goal of launching R2 by 2025. That's noteworthy given how most EV start-ups are cash-strapped and funding is one of their biggest hurdles to growth.
To be sure, Rivian's R1T pickup truck has only recently hit the roads, and it's also recalling around 500 trucks for faulty airbags. The market, though, has found reasons to believe in Rivian's story after its latest numbers, and it's pumping money into it as it perhaps sees Rivian as an undervalued stock in an exponential growth industry.
