Electric vehicle maker Rivian Automotive's (NASDAQ: RIVN) stock got off to a strong start on Friday, rising 3.8% as of 10:55 a.m. ET. Piper Sandler, an investment banker, deserves credit for that.
Last night, following the end of trading on a day when Rivian stock took a beating, losing 8 percent of its value, Piper Sandler came to the rescue, raising its price objective for the electric vehicle stock to 21 dollars per share and upgrading Rivian stock to an overweight rating.
Exactly what the financial expert expressed This story was covered last night by StreetInsider.com. According to the ratings watcher, Piper Sandler reiterated the majority of last week's points put out by other analysts in support of Rivian stock:
The R2 is Rivian's new electric SUV, and the company shocked investors when it announced plans to release the R3 electric hatchback shortly after. At a far lower price point than Rivian's current R1T and R1S models, the new R2 has had 68k pre-orders.
By delaying the development of a new factory in Georgia, Rivian will save a few billion dollars by building the R2 at its Normal, Illinois, plant first. Additionally, this will hasten the launch of R2 by approximately six months.
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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