Rivan (RIVN, Financial) shares jumped 7% on Monday, after Benchmark analysts initiated coverage with a "Buy" rating and set a price target of $18, signaling a potential 25% upside from current levels. The upbeat outlook reflects growing optimism about the electric vehicle (EV) maker's future prospects amid a competitive market.
That investment confidence comes after the California-based EV startup announced a three-year joint venture with Volkswagen Group (VWAGY, Financial) worth up to $5.8 billion this month. The deal also helps bolster Rivian's finances as they crank up production and navigate supply chain challenges. Volkswagen's involvement in the deal also added another $1 billion unsecured convertible note to the already $8.1 billion in liquidity that Rivian finished the third quarter with.
Despite supplier disruptions, Rivian delivered 10,018 vehicles and produced 13,157 vehicles during Q3. While Rivian still lost $1.08 a share for the quarter, it was an improvement from $1.44 a year earlier. Benchmark recently initiated coverage on Rivian stock with a 'Buy' rating and a price target of $18, which is more optimistic than what Wells Fargo is offering.
As Rivian refines operational efficiency in the future, it expects gross profits to become positive in Q4. However, due to ongoing component shortages, the company has cut its fiscal 2024 production forecast to 47,000–49,000 vehicles.
