Struggling for traction amid last year’s inflationary pressures, electric vehicle (EV) upstart Rivian Automotive (NASDAQ:RIVN) finally enjoyed some positive momentum. After jumping 9% to start the midweek session, RIVN stock gained about 11% in the late afternoon. A combination of strong-than-expected demand and troubles among its rivals created downwind benefits.
Primarily, Benzinga cited research by Needham analyst Chris Pierce, who analyzed state vehicle registrations. According to Kelley Blue Book sales data, owners registered a total of 8,145 Rivian EVs in the first quarter. This tally compares favorably to the consensus estimate of 7,167 vehicles forecasted to be registered in Q1.
Pierce also noted that Q1 used-vehicle data confirmed that the secondhand market offered fewer used Rivian vehicles than competing EVs, including Lucid Group (NASDAQ:LCID). Needham currently features a “buy” rating on RIVN stock and a $26 price target. From the time of writing, the estimate represents an upside potential of approximately 80%.
In addition, the stronger-than-expected demand figure adds more weight to Rivian’s ambitious target of delivering 50,000 vehicles for 2023. Enticingly, the three most recent analyst assessments — from Morgan Stanley, Truist Financial, and Barclays – feature a reiteration of buy ratings. As well, among the three, the “worst” upside target is again $26 per share.
Competitor Troubles May Have Bolstered RIVN Stock
Along with fresh evidence of the Rivian brand resonating with customers, RIVN stock may have also benefitted from rival missteps. In particular, Lucid — which focuses on premium electric-powered sedans — recently announced layoffs. Therefore, from a comparative standpoint, Rivian seemingly appears more credible.
According to Barron’s, Lucid will reduce its headcount by 1,300, roughly equivalent to 18% of its workforce. “This action is aligned with the cost discipline announcement we made in late February when we reported earnings,” wrote Lucid CEO Peter Rawlinson in an email to employees dated March 28. “We are also taking continued steps to manage our costs by reviewing all non-critical spending at this time.”
Still, prospective investors of RIVN stock should note that Rivian itself played the pink slip game earlier this year. In February, Reuters reported that the EV maker announced the laying off 6% of its workforce. Primarily, the motivation for the headcount reduction struck a familiar note: cost reduction.
In addition, the news agency noted that Rivian suffered from falling cash reserves and a weak economy. As well, the enterprise braced for an industry-wide price war.
Although RIVN stock looks like the winner now, it’s been a challenging ride overall for the underlying company. Since the beginning of the year, RIVN slipped 17%. And in the past 365 days, shares dropped over 73% below breakeven.
For comparison, RIVN stumbled 72% in the trailing year. Sector king Tesla (NASDAQ:TSLA) — while gaining tremendously percentage-wise in 2023 — lost almost 48% in the trailing 12 months.
Why It Matters
On balance, RIVN stock carries a consensus moderate buy view among Wall Street analysts covering the security within the past three months. This assessment breaks down to 13 buys, four holds, and two sells. The average price target stands at $28.11, implying a 96% upside potential.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
