Shares of Rivian (RIVN 6.10%) were moving higher Thursday after the electric vehicle (EV) maker got an analyst upgrade from Jefferies Wednesday night and unveiled its new R2 electric SUV at a launch event Thursday afternoon and then, in a surprise, revealed two additional compact SUV models -- the slightly smaller R3 and a "performance" variant dubbed the R3X.
As of 1:29 p.m. ET, Rivian stock was up 8.1% on the news.
Image source: Rivian.
Rivian shows signs of life
Shares of the EV start-up hit an all-time low after its fourth-quarter earnings report last month, but now investors are eager to turn the page. A bullish analyst note and a new product launch are good catalysts to shift the mood.
Jefferies called the stock a buy Wednesday night, saying the EV stock "has looked closest to Tesla in 'spirit,'" and noted Rivian's proprietary software stack, strong brand identity, and potential to grow globally. Jefferies gave the stock a price target of $16, implying an upside of 45% from its closing price Wednesday.
However, the stock's gains Thursday seem to be more in response to the launch event, where the company pulled the curtain back on the R2, a two-row compact SUV with a battery range of around 300 miles. Rivian said it would be priced starting at $45,000, and that production is scheduled to begin in 2026. Reservations are now open. It also surprised investors by unveiling the R3 and R3X compact SUVs.
Can Rivian turn it around?
Rivian could desperately use some investor buy-in after its disappointing fourth-quarter results, guidance for flat production in 2024, and news that it's cutting 10% of its workforce.
However, a positive analyst note and the unveiling of a vehicle that won't be commercially available for two years are unlikely to change the trajectory of the stock in the near term. Like much of the rest of the EV industry, Rivian is struggling amid plateauing customer demand and higher interest rates. The macro conditions help explain why the company doesn't plan to grow its production this year.
It's also rapidly burning cash, though the company said it would deliver a modest gross profit by the fourth quarter, and that will be an important test for the company. With its revenue growth likely to decline this year, Rivian will need to prove it has a viable path to profitability in order to breathe new life into the stock. Considering the industrywide headwinds, that won't be easy even if its new vehicles are well received.
