Rivian Racing Towards a Prosperous 2024

• Rivian experienced a turbulent 2023 but will conclude the year ahead of its competitors.
• Several favorable factors are in place to drive continued growth.
• Other than Tesla, Rivian stands out as one of the most appealing electric vehicle options.

The electric vehicle (EV) sector has been a rollercoaster ride for investors in 2023. Despite a rocky start, it is expected to wrap up the year on a positive note. The Global X Autonomous & Electric Vehicles ETF (NASDAQ:) is set to finish 2023 with an approximately 25% gain, a significant turnaround from its meager performance in October.

The prospect of declining interest rates along with improving inflation rates has contributed to this upturn. Notably, Rivian (NASDAQ:) has outshone its peers, with its shares managing to mirror the annual return of the broader EV ETF. While it has been eclipsed by the EV behemoth Tesla (NASDAQ:), which has surged by 140% this year, Rivian is finishing the year strongly.

Rivian’s shares have soared by 53% since mid-November, surpassing Tesla’s 21% rise and quadrupling the DRIV ETF’s 14% gain. Therefore, despite a somewhat lackluster overall year, Rivian’s recent performance firmly places it on the radar for those seeking exposure to the EV market in the upcoming year.

Rising Confidence and Prospects

The analysts at Stifel recognized this trend earlier this month, upgrading their rating on Rivian stock. They acknowledged the prevailing challenges affecting the industry, ranging from range anxiety to vehicle costs and perceived deficiencies in charging infrastructure. Notwithstanding these headwinds, they believe that Rivian is well-positioned to outperform its counterparts in the upcoming quarters.

The optimistic outlook stems from Rivian’s distinctive strengths, including its high-quality R1S/R1T models, which have driven brand recognition. Furthermore, the company’s strategic alliance with Amazon.com Inc (NASDAQ:) for 100,000 electric delivery vehicles and its potential to sell its vans to other fleets have added to its allure.

Rivian’s expansion into the broader commercial vehicle market with its electric vans is poised to deliver considerable cost savings for businesses, potentially revolutionizing sustainable transportation. This move is set to solidify Rivian’s position as a leader in the market. Additionally, the company’s margins are expected to improve throughout 2024, buoyed by better pricing, new supplier agreements, and increased production.

In addition, the industry-wide challenges that have plagued the sector in recent years seem to be receding, with inflation showing signs of moderation and the possibility of interest rate cuts looming on the horizon in 2024.

Anticipated Growth Trajectory

Rivian is entering 2024 with a street-high price target of $44, indicating a potential upside of nearly 100% from its recent trading levels. This would propel shares back to their highest levels since April of the previous year, marking a remarkable turnaround. Just this summer, the stock was navigating all-time lows, having plummeted by over 90% from its peak.

However, the road ahead may not be without its challenges. Despite the aforementioned positives, Rivian faces the recurrent hurdles of heightened competition across the board and the necessity for perpetual innovation to stay ahead of the burgeoning number of EV rivals. Its lack of profitability remains a persistent concern that management will be keen to address in the coming year. Fortunately, the trajectory appears to be upward, with Rivian consistently posting record quarterly revenue figures since its public debut in 2021, save for a minor setback earlier this year.

Having rebounded from the $15 level observed in November, its shares are presently encountering resistance around the $24 mark. While this may pose a slight hindrance, it is affording the stock’s relative strength index the opportunity to cool from the previously heated levels, positioning Rivian shares favorably for the next leg of the rally beginning next month.