RIVN - Rivian: Cash Flow Troubles Ahead - Probably A Race To The Bottom

2024-05-12 09:00:00 ET

Summary

• RIVN has underperformed the wider market again, demonstrating the lack of bullish support while discrediting our Buy ratings thus far.
• It remains in the startup mode with uncertain profitability prospects, with a capital raise/ debt reliance very likely based on its current cash burn rate.
• The consensus forward estimates show optimism for RIVN's growth potential, if it can successfully bring R2 to market while bridging its balance sheet through H1'26.
• However, with the stock consistently falling while charting lower lows/ highs, we prefer to downgrade it to a Hold until a floor has materialized and gross profitability is achieved in FQ4'24.
• Even so, anyone still holding RIVN here should also remain (extremely) patient, while sizing their portfolio according to their risk appetite.

We previously covered Rivian Automotive (RIVN) in February 2024, discussing why we had continued to rate the stock as a Buy, attributed to the attractive risk/ reward ratio from the misunderstanding surrounding RIVN's supposed delivery miss in FQ4'23....

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