Written by Cláudio Afonso | LinkedIn | X
On Wednesday, Cantor Fitzgerald analyst Andres Sheppard published a new research note, increasing the firm’s price target for Rivian from $15 to $19 while maintaining an Overweight rating.
This adjustment follows Volkswagen Group’s announcement of an investment in Rivian, which aims to enhance software technology, electronic control units (ECUs), and related network architecture design.
As of the time of writing, Rivian shares are trading 38 percent higher on Wednesday pre-market trading at $16.50 per share after soaring to $18.88 on late Tuesday.
Volkswagen Group revealed on Tuesday night that it would invest up to $5 billion in Rivian. This investment includes a $1 billion stake and an additional $4 billion to form a joint venture, expected to close in the fourth quarter of 2024.
Sheppard highlighted Rivian’s strong liquidity position, noting that management reaffirmed during its first-quarter call that the company’s funds are sufficient to sustain operations through 2025.
“With the recent Volkswagen announcement, we expect Rivian to extend its runway into 2026, which is significant since management is targeting the start of production of its R2 Line in the first half of 2026,” Sheppard stated.
The firm is forecasting the EV startup to deliver 53,346 vehicles this year.
“Lastly, delivery consensus (FactSet) for 2Q is 10,282 vehicles, and for FY24 we continue to model 53,436 deliveries, vs. consensus 52,830”, the analyst added.
Rivian has recently reiterated its full-year 2024 adjusted EBITDA guidance of negative $2.7 billion and had previously reduced its full year 2024 capital expenditure guidance by $550 million to $1.2 billion.
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Following the investment news, Rivian’s shares surged, closing 8.63 percent higher on Tuesday, increasing the company’s market capitalization to $11.90 billion. In after-hours trading, the stock continued to climb, rising 35 percent to $16.14.
On the social media platform X, Rivian CEO RJ Scaringe expressed his enthusiasm for the partnership with Volkswagen. “This is exciting! Volkswagen Group CEO Oliver Blume and I are thrilled to announce the formation of a joint venture between our two companies,” he wrote. “This partnership brings Rivian’s software and zonal electronics platform to a broader market through Volkswagen Group’s global reach and scale, while providing an expected $5 billion of capital to Rivian as we bring R2 and our next generation of vehicles to market!”
In a statement, the German group said that, in case the joint venture would be established successfully, Volkswagen “intends to make further investments in shares of Rivian Automotive, Inc., or in the joint venture in the total amount of 4 billion USD”.
“The additional investment in shares of Rivian Automotive, Inc., would be made in two tranches of 1 billion USD each in 2025 and 2026 and would be contingent on Rivian Automotive, Inc., and the joint venture achieving certain milestones. With respect to the joint venture Volkswagen would provide a payment in the amount of 1 billion USD upon foundation of the joint venture in 2024 and grant a loan in the amount of 1 billion USD in 2026,” VW added.
Written by Cláudio Afonso | LinkedIn | X
