It takes guts and conviction to invest in electric vehicle (EV) manufacturer Rivian Automotive (NASDAQ:RIVN). Yet, RIVN stock could make a multi-bagger move in the coming quarters. Sure, Rivian isn’t perfect, but the market doesn’t seem to appreciate the company’s impressive results and improvement.
At the same time, Rivian Automotive is audaciously ending its exclusivity pact with an e-commerce and delivery company that you’re certainly familiar with. Ultimately, Rivian is a bold company and you should have a bold streak in your personality if you want to invest in Rivian Automotive.
Rivian Automotive’s Shocking but Sensible Move
Some of you won’t believe it, but Rivian Automotive recently terminated its exclusivity agreement with Amazon (NASDAQ:AMZN) and will allow other companies to purchase Rivian’s commercial electric vans. Just to review, Rivian’s deal with Amazon in 2019 prevented the automaker from selling its Rivian Commercial Van to other companies.
Don’t get the wrong idea here. Rivian Automotive will still work with Amazon. Furthermore, Rivian stands by its pledge to help Amazon put 100,000 EVs on the road by the year 2030.
Actually, ending the exclusivity pact could benefit both companies. After all, Amazon holds a 17% stake in Rivian Automotive. Udit Madan, vice president of transportation at Amazon, explained, “This has been part of our plan with Rivian from the beginning.”
Madan added that having “electric delivery vehicles on the road is good for our communities and our planet.” Really, though, I suspect that Amazon has a financial rationale for supporting Rivian Automotive’s termination of the exclusivity agreement. That’s fine, since this could be a win-win for Rivian and Amazon as well as both of the companies’ shareholders.
Great News for RIVN Stock Investors
RIVN stock has been on a downtrend since August. It’s quite cheap now, and it definitely looks like a bargain in light of Rivian Automotive’s third-quarter 2023 financial results.
Rivian’s earnings beat is terrific news for the downtrodden shareholders. Specifically, Rivian Automotive reported an adjusted earnings loss of $1.19 per share, versus Wall Street’s consensus estimate of a loss of $1.31 per share.
Admittedly, Rivian Automotive isn’t a profitable company right now, but it’s demonstrating improvement. Bear in mind, Rivian sustained an earnings loss of $1.57 per share in the year-earlier quarter.
Moreover, Rivian Automotive announced Q3 2023 sales of $1.3 billion, which was in line with Wall Street’s estimate and better than the company’s $1.1 billion in sales from the third quarter of 2022. Thus, I concur with D. A. Davidson analyst Michael Shlisky’s assessment, “There was much to like in the quarter.”
By the way, Shlisky assigned RIVN stock a $19 price target, which implies a fair amount of upside from the current share price. The analyst seemed to be positive about Rivian Automotive selling commercial electric vans to other companies than Amazon.
Additionally, Shlisky cited Rivian’s production guidance. Notably, Rivian Automotive raised its 2023 EV production estimate from 52,000 units previously, to guidance of 54,000 vehicles.
RIVN Stock Could Be a Huge Winner in 2024
Make no mistake about it. There are risks involved for Rivian Automotive’s shareholders. The EV industry is highly competitive, and Rivian isn’t currently profitable.
On the other hand, Rivian Automotive appears to be improving its bottom line and the company’s production guidance is encouraging. Maybe, RIVN stock could sail past Shlisky’s $19 price target and eventually double, triple or more. It’s a gamble worth taking if you believe in Rivian’s growth story and can handle some risk in pursuit of huge potential rewards.
On the date of publication, David Moadel 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.
