Rivian shares keep hitting all-time lows. Here's where Wall Street sees it going next

Published Sun, Mar 26 20239:17 PM EDT

Most electric vehicle stocks are up this year, but Rivian is one exception. Its shares keep hitting all-time lows, dipping below $13 per share at some points during March. Its shares are down around 25% year-to-date. By contrast, the Global X Autonomous and Electric Vehicles ETF is up more than 20% year-to-date. Rival EV makers such as Tesla have soared 56% in the same period, while Lucid is up nearly 20%. Rivian's underperformance versus its peers comes after a series of developments this year. Most recently, it said it was in talks with Amazon to adjust an exclusivity clause for the production of 100,000 electric trucks for the e-commerce giant. That came as Amazon underwhelmed with its order numbers. Rivian shares also plunged after it said it planned to raise $1.3 billion in cash via a sale of convertible bonds. Where does the EV maker go next? Here's what Wall Street analysts are saying. 190% upside? Morgan Stanley in a March 21 research note said that it had seen investors' "frustration around strategy and lack of conviction in the strategic direction of the company," with the stock now trading just below its cash value. It listed a few factors that could drive the company's trajectory going forward. One was cost cutting – one strategy that many tech firms and EV makers are deploying to "add further runway to their operations that have yet to generate cash." However, based on the company's guidance, Morgan Stanley estimates Rivian could spend nearly $6 billion on both operational and capital expenditure this year – which is 1.5 times its full-year 2023 revenues, the bank forecast. Morgan Stanley analysts, led by Adam Jonas, also put the spotlight on its "aggressive growth," in a comparison with Tesla. "In our comparison of the operational performance of Tesla in 2015 (21.3% gross margin) vs. Rivian in 2023 (negative 66% gross margin), it is Rivian's more aggressive growth, vertical integration, and simultaneous launch strategy that appears to be putting the most strain on the organization," they wrote. The bank added in a separate note that Rivian's spending levels are higher as the company is targeting a "much steeper" growth rate compared to Tesla's trajectory in 2015. "Is now the time to add a 2nd plant and a 3rd model line (RT) with so much uncertainty ahead?" they added, referring to Rivian's $5 billion plant in the U.S. state of Georgia. However Morgan Stanley is still giving the stock an overweight rating, and a price target of $26 – or nearly 90% upside. The bank's analysts, led by Adam Jonas, said Rivian was the only EV start-up name it recommends, apart from Tesla which is also rated overweight. "While the stock offers a rather wide risk/reward skew ($5 bear case to $55 bull case) we remain compelled by the company's differentiated product, scalable end markets, cost cutting potential, cash balance, and valuation," they wrote. Financial services firm Canaccord Genuity said that Rivian is "burning cash," in a March 16 note. However it said that the bond sale which raised $1.3 billion was mostly a positive. "We were encouraged by the company's raise, given the difficult capital markets environment, particularly for sustainability-related companies," it wrote. Canaccord analysts also pointed to the possibility of new partnerships, beyond Amazon, that could be a tailwind for Rivian – a point that Morgan Stanley also raised. While they said they do not think the potential ending of the Rivian-Amazon exclusivity agreement is the "beginning of a break-up," they say that having additional partners will certainly help Rivian. "To date, Rivian's commercial vehicles have been bound to Amazon. However, we see significant room for additional market share from new partners," they wrote. Of the reports of the exclusivity agreement as well as the fund raise, Canaccord said: "These developments are mechanisms through which the company can diversify (its commercial customer slate) and fortify (its balance sheet) to more soundly execute upon its long-term mission." Canaccord gave Rivian a price target of $40 – or over 190% potential upside. BofA in a March 10 note also gave the stock a $40 price target. "We maintain our Buy on RIVN, which is predicated on our view that it is one of the most viable among the start-up EV automakers and a relative competitive threat to incumbent OEMs (and possibly to other automotive-related verticals)," said the BofA analysts. Overall, analysts covering the stock gave it an average potential upside of more than 100% — with a buy rating of 62%, according to FactSet. — CNBC's Michael Bloom contributed to this report.