Rivian Automotive (NASDAQ: RIVN) investors were shaken Thursday by Fisker's possible restructuring. After markets closed with Rivian shares down 8%, a miracle occurred:
Piper Sandler analyst Alexander Potter upgraded Rivian to "overweight" and raised his price objective to $21, meaning this EV stock could nearly double in price over the next year.
Potter repeated Rivian's latest stock price increase arguments to support his thesis: Rivian is delaying billions of dollars in capital spending on a Georgia factory.
Rivian will build its R2 electric SUV in Illinois, and it has 68,000 preorders before it begins production. Additionally, Rivian's surprising revelation of an R3 electric hatchback "could be one of the most compelling designs on the market when it is released."
Deliveries of the R2 won't begin until the first half of 2026. No Rivian R3 release date has been announced. Rivian only claims R3 will appear "soon after" R2, and even that depends on L2's "launch" and "ramp" manufacturing.
The best part is that in the last few days, Rivian stock has dropped in price by almost 20%. Piper is "compelled" to upgrade the stock because it thinks the current share price is a bargain.
Is it mandatory that you purchase Rivian shares, though? That is the true inquiry. I still don't think you should, even though Piper is quite optimistic. Investors were worried that Rivian would spend a lot more on capital expenditures than it actually is. But even with $4.9 billion in debt and $9.4 billion in cash on hand, it continues to spend roughly $6 billion annually.
Meanwhile, it will be another two years before its R2 electric SUV is available for purchase and starts making money. Rivian will likely need to issue and sell additional shares to cover any shortfall in funding before that date. I think Piper's $21 price objective is too optimistic, and the stock is still dangerous.
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