Rivian Is Nailing The Three Big Questions In EV Market: Analyst

Needham analyst Chris Pierce reiterated a Buy rating on the shares of Rivian Automotive Inc RIVN with a price target of $31.00.

The analyst believes RIVN is answering the three most common questions that comes across EV OEM coverage: is there vehicle demand; can the vehicles be manufactured at increasing scale to drive higher gross margins through better fixed cost absorption; and is there leverage on per-unit costs?

The analyst surfed through 25 weeks of listings data from Cargurus, the used vehicle marketplace platform, which is supportive of a stronger used market for RIVN versus its only competitor in electric pickups.

RIVN has spoken to a reservation backlog that takes it through '24, with RIVN vehicles making it to the secondary market in lower numbers vs peers and holding their value better, an indicator of strong secondary market demand matching strong primary market demand, said the analyst.

The analyst said transaction data showed firm used vehicle pricing, increasing the confidence in owner satisfaction and vehicle demand.

The company is targeting the most profitable auto segments (pickup and SUV), observed the analyst.

Rivian has a large and established corporate order pipeline, for which the analyst sees upside potential and an already-formulated, new-model roadmap. 

Price Action: RIVN shares are trading lower by 2.6% at $19.79 on the last check Thursday.