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Rivian automotive industry (NASDAQ: RIVN) Shares are ending the trading week on a high, soaring 10% higher to over $18 as of 12:30 PM ET – and for the most surprising reason:
This morning, investment bank Mizuho raised its price target for Rivian… to $15 per share.
What Mizuho said about Rivian
Let me repeat that: Rivian stock closed last night at over $16. Mizuho just said it’s only worth $15 (and only gave the stock a neutral assessment — no purchase). And investors responded by bidding up for Rivian stock upwards instead of down.
Does this make any sense at all?
Kind of. While Mizuho doesn’t seem particularly impressed with Rivian’s valuation, analyst Vijay Rakesh did say nice things about Rivian’s electric truck business. He specifically noted that the company increased electric vehicle (EV) deliveries in the second quarter by 9% year-over-year to about 13,800 units, even though production by new There were only about 9,600 electric units. So not only did Rivian deliver more electric vehicles than most analysts predicted (11,500), but it must also have cleared a lot of unsold inventory by selling about 44% more electric trucks than it built in the quarter!
Are Rivian Stocks a Buy?
Now factor these solid sales trends into what Mizuho says the big story of the second quarter — Volkswagen‘s $5 billion investment, which has the potential to single-handedly solve Rivian’s cash flow problems – and things are starting to look better for Rivian.
Granted, Rivian is still nowhere near profitable, and it’s still burning a lot of money. But the balance sheet looks a lot stronger than ever, the liquidity risk is gone for now and “RIVN has a good product roadmap with its cheaper R2 in the first half of 26E.” While success is far from guaranteed, the company now has a good chance of becoming a profitable EV maker rather than going bankrupt.
Rivian shareholders have good reasons to be happy about that.
Should You Invest $1,000 in Rivian Automotive Now?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool holds positions in and recommends Volkswagen Ag. The Motley Fool has one disclosure policy.
Why Rivian Stock Gained 10% on Friday was originally published by The Motley Fool