Wall Street finds itself puzzled over Rivian’s stock, which recently fell by 3.71%. Analysts have set price targets ranging between $14 and $19 per share. With the stock lingering around $13, opinions on its short-term potential differ significantly. Some see little immediate gain, while others foresee substantial growth. Notably, one analyst has reaffirmed an outperform rating, maintaining a confident $19 price target, suggesting an impressive 42% upside—the most optimistic projection on Wall Street.
Is there truly a 42% potential increase for Rivian’s stock within the next year? There are reasons to think this analyst’s outlook may be accurate.
What to Anticipate from Rivian in the Coming Year
Forecasting a stock’s short-term trajectory is challenging. However, anticipating business developments is more straightforward, especially for a company like Rivian, where the next few years are somewhat predictable.
To understand Rivian’s current situation, it’s important to note the company’s impressive recent performance. In just a few years, it has grown from virtually no revenue to over $5 billion, driven by two luxury models, the R1T and R1S. This strategy resembles Tesla’s initial approach, which focused on high-end models to build a reputation for quality and reliability.
Rivian is expected to follow Tesla’s path further. After Tesla’s success with the Model S and Model X, it capitalized on its reputation and financial resources to introduce the more affordable Model 3 and Model Y. This move propelled Tesla’s revenue from levels similar to Rivian’s current earnings to nearly $100 billion. Rivian plans to emulate this growth with its upcoming R2, R3, and R3X models, all priced under $50,000, significantly broadening its market and boosting revenue.
Rivian’s new models won’t be available until the first half of 2026, making the upcoming year relatively uneventful, focusing mostly on manufacturing updates and production timelines. However, one significant event in the next year could act as a major catalyst for the stock, which has Wall Street’s most optimistic analyst hopeful.
A Potential Catalyst for Rivian’s Stock
A key distinction between Tesla and Rivian currently lies in their ability to generate positive gross margins. Tesla has been profitably selling vehicles for years, while Rivian, as a smaller competitor, is still incurring substantial losses per vehicle. However, Rivian’s management expects this to change soon. Last month, company executives confirmed their expectation to achieve positive gross margins by the fourth quarter of 2024. Over the past year, Rivian has reduced its gross loss per vehicle from $33,000 to just $6,000. Closing this gap would validate management’s financial acumen as the company ramps up spending for its new mass-market models.
Canaccord analyst George Gianarikas believes that reaching profitability will demonstrate to the market that Rivian is not “one of the EV walking dead,” and will give the company the momentum needed to launch its R2, R3, and R3X sales. This progress, he argues, will enable Rivian to “overcome challenges, refine operations, and invigorate its mass market lineup—the R2/R3—and achieve scale.”
If Rivian can reach positive gross margins this year, its prospects for 2025 and beyond will significantly improve. When its mass-market vehicles finally hit the roads, the company’s current $13 billion valuation might seem like a bargain. However, investors will need patience to witness the full unfolding of this story.
