The past year has been challenging for electric vehicle manufacturers like Rivian Automotive (NASDAQ:RIVN). However, RIVN stock caught a bid recently and this could just be the beginning of a swift recovery for Rivian and its shareholders.
Although analysts are divided in their assessments of Rivian Automotive, the company just picked up a bullish rating. Hence, even if 2024 got off to a rough start for Rivian stock, the rest of the year could be amazing.
Why Did RIVN Stock Jump 13% in a Single Day?
Here’s a textbook example of what it looks like when a stock turns a corner. After a multi-month drawdown, RIVN stock jumped 13.42% on March 7, ending the day at $12.51.
There were actually a couple of catalysts for this share-price move. The main catalyst was Rivian Automotive’s announcement of not just one, but three new upcoming EV models.
The R2, R3 and R3X vehicle models will all be based on Rivian Automotive’s “new midsize platform.” R2 is a midsize SUV, R3 is a midsize crossover and R3X is a “performance variant of R3.”
Rivian Automotive is putting its plans to build a Georgia-based EV-production factory on hold. This will save Rivian over $2.25 billion in capital expenditures, according to the automaker (via Bloomberg).
That’s a smart move, but Rivian Automotive’s most brilliant move (in my humble opinion) is starting the R2 SUV “in the $45,000 price range.” That’s actually quite reasonable for a brand-new EV in the 2020s. Rivian plans to commence production of the R2 “in first half of 2026.”
Rivian Stock Gets a ‘Buy’ Rating
The second catalyst that propelled RIVN stock higher came from Jefferies analyst Philippe Houchois. Reportedly, Houchois initiated coverage of Rivian shares with a “buy” rating and an ambitious $16 price target.
This doesn’t mean Houchois is wearing rose-colored glasses. He acknowledged Rivian Automotive’s near-term challenges, stating that the automaker “is facing two critical if not existential tests this year.”
The Jefferies analyst then specified Rivian’s tests, “(1) deliver a $35,000-to-$40,000 reduction in unit production costs from redesign, purchasing, and manufacturing efficiency; and (2) demonstrate the R2 model can be developed at a significantly lower cost than R1.”
Obviously, Houchois’ rating and price target on RIVN stock imply that Rivian Automotive’s challenges are surmountable. Going forward, investors should monitor Rivian’s costs in producing the R2 and other EV models. Hopefully, the company can keep those costs under control.
RIVN Stock: Here’s Your On-Ramp
2026 might seem far away, but it will be here before you know it. Then, if all goes according to plan, Rivian Automotive will start production of the comparatively affordable R2 SUV model.
If Rivian Automotive can produce the R2 without going too far over budget, the rollout of this EV model could be a watershed moment. So, this is your on-ramp to long-term gains in RIVN stock and investors should take a share position today.
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.
