Rivian Automotive (NASDAQ:RIVN) impressed investors when it revealed both its second- and third-generation electric vehicles (EVs) at an event earlier this month. After a short-lived bounce in the stock following that announcement, the stock lost its momentum and is still down by more than 50% in 2024.
Today, though, Piper Sandler analyst Alexander Potter upgraded Rivian stock to a buy rating from a prior hold recommendation. He also bumped his price target from $15 to $21 per share. That caused the stock to jump Friday as the new price target represents a nearly 100% rise in the shares.
Rivian's secret weapon
Rivian's second-generation electric vehicle will be a mid-size SUV priced about $30,000 lower than Rivian's full-size R1S. The $45,000 base price should bring in more potential customers. Shipments are expected to begin in early 2026.
But the analyst also noted a major pivot that will help the company retain needed cash. The R2 will be built at the company's existing Illinois plant rather than a Georgia facility currently under construction. Delaying spending on that construction project will save Rivian more than $2 billion.
Rivian also has a unique vehicle lineup among EV start-ups. The company's electric delivery vans might make an even more compelling reason to buy Rivian shares now. While it grows its consumer business, it has an existing customer in Amazon and other commercial buyers for its delivery vans.
Rivian still needs its new R2 platform to be a hit with customers. But the over $2 billion in capital savings should help extend its time frame for that success. Piper Sandler analyst Potter thinks the shares have bottomed, and with the delivery van business continuing to generate cash, investors might find it worthwhile to follow his advice and buy the stock.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Howard Smith has positions in Amazon and Rivian Automotive. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.
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