Rivian Automotive (RIVN 6.10%) stock has kicked off 2024 in low gear, with its shares losing value steadily in recent days. This morning, the electric vehicle (EV) stock was trading 6% lower as of noon ET after an analyst downgraded the stock's price target by nearly 35% on a weak outlook for 2024.
Rivian stock gets a big downgrade
This morning, Deutsche Bank analyst Emmanuel Rosner slashed Rivian stock's price target to $19 per share from $29 a share, according to The Fly. In other words, Rosner sees barely 11% upside in Rivian shares over the next 12 months from its Wednesday opening price.
Rosner sees risks to Rivian's volumes in 2024 given the slow ramp-up of production and prolonged factory shutdowns. The analyst believes the slowdown could hit Rivian's margins and bottom line hard and lead to big losses for the EV maker until the third quarter of 2024. Rosner further contends that Rivian could still hit a positive gross margin in Q4 as planned, but only if it executes flawlessly.
Will Rivian stock move higher in 2024?
Rivian has faced several challenges ever since it produced its first R1T pickup truck in late 2021. The company, though, tried harder to turn things around in 2023, and its efforts started to show up in its numbers. For example, Rivian started ramping up production and produced 57,232 EVs in 2023 against its guidance of 54,000 units. It delivered just a little over 50,000 vehicles in the year.
Importantly, Rivian's production hit a record high in the fourth quarter, reflecting the company's efforts to scale up production. Rivian's gross loss per vehicle also improved by around $2,000 per unit to $30,648 in Q4. Rivian expects to achieve a positive gross margin by the end of this year.
Rivian, however, delivered 10% fewer vehicles in the fourth quarter compared with the third quarter. That sequential drop and the persistent gap between its production and delivery volumes has miffed investors and raised questions about Rivian's demand, ability to fulfill orders, and its path to a positive margin this year. Investors should get a better idea about what to expect from Rivian in 2024 when it reports its Q4 and full-year numbers on Feb. 21, but the EV stock will need solid catalysts to maintain its momentum from 2023.
