Rivian Automotive (NASDAQ: RIVN) stock surged during intraday trading Wednesday after the EV maker received a bullish upgrade from Cantor Fitzgerald.
Cantor Fitzgerald has raised Rivian’s stock price target from $15.00 to $19.00. The firm has also maintained an Overweight rating on the stock. This adjustment comes shortly after Rivian announced a strategic partnership with Volkswagen.
On Tuesday, Rivian revealed a joint venture with Volkswagen to co-develop software technology, electronic control units, and network architecture design. Under this joint venture, both companies will have equal control and plan to channel up to $5 billion in investments from Volkswagen by 2026.
The financial framework includes an immediate infusion of $1 billion through an unsecured convertible bond. Additionally, Volkswagen has committed to invest approximately $4 billion, contingent upon the joint venture establishment. The German automaker will disburse this commitment in phases, consisting of two $1 billion tranches allocated to Rivian’s common stock in 2025 and 2026. Furthermore, a $2 billion investment will commence with an initial payment slated for the fourth quarter of 2024, supplemented by a loan in 2026.
Cantor Fitzgerald believes this partnership will allow Rivian to extend its cash runway, achieve cost savings, and enhance its margin profile over the medium to long term. The firm expects these anticipated benefits to materialize as the deal closes in the fourth quarter of 2024.
Analyst Ratings
Among other analysts, Canaccord Genuity maintained a Buy rating for Rivian, reflecting confidence in its growth prospects.CFRA reaffirmed a Sell rating but increased the price target to $8.00. Additionally, Truist Securities revised its outlook, raising Rivian’s price target to $13.00 while maintaining a Hold rating. Guggenheim initiated coverage on Rivian with a Buy rating, highlighting optimism about the company’s growth trajectory and market position.
Rivian has also been focusing on cost-cutting measures, leading to a 35% reduction in material costs for the company’s vans and similar savings across other vehicle lines. These efforts aim to streamline operations and improve financial performance.
Rivian Automotive (NASDAQ: RIVN) Stock Reaction
On Wednesday, RIVN stock jumped 23.24%, closing at $14.74, marking a 33.76% increase for the week. The trading volume was 261,980,432 shares, significantly higher than the average daily volume of 41.27 million.
