Today, investors of a certain electric vehicle (EV) maker are breathing a big sigh of relief. Indeed, last week Rivian Automative(NASDAQ:RIVN) had a rough go. RIVN stock dropped by 12% over the course of the week.
However, things are turning around today as Morgan Stanley(NYSE:MS)initiated coverage on RIVN stock with an overweight rating and a $147 price target. This price target represents an upside of 34% from current prices. In response, shares of RIVN stock are trading higher by 4%.
Let’s take a look at the details of this new price prediction.
RIVN Price Prediction: Is Rivian “The One” to Challenge Tesla?
Morgan Stanley analyst Adam Jonas led the initiation coverage on Rivian. However, it wasn’t necessarily the price target that attracted the most attention. It was Jonas’ comment on Rivian competitor Tesla(NASDAQ:TSLA) that surprised many investors:
“Rivian’s compelling product, strong management, and deterministic access to capital are underpinned by a strategic relationship with AMZN to decarbonize the final mile. We see it as ‘the one’ that can challenge Tesla.”
A direct comparison between the two EV makers seems far off for now. However, Rivian may have the one-up on Tesla in terms of delivery vans. Jonas calls Rivian’s delivery vans “the most capable/desirable product in the market for $80k.” While Tesla has yet to enter the delivery van market, its strength lies in selling EVs directly to consumers.
On that note, Rivian launched its highly anticipated R1T pickup truck this year after supply chain delays. Deliveries for the pickup truck have started, although many customers who preordered are reporting that they won’t receive their order until 2022. Prices start at $67,5o0 for the base R1T model.
According to Tipranks, Adam Jonas has a 57% success rate and an average return of 14.5% during a one-year period. Jonas is a highly regarded analyst and ranks at 465 out of the 7,727 total analysts thatTiprankstracks.
The Bottom Line on Rivian
Rivian remains a speculative investment with high future expectations. While Rivian has reported $0 in revenue for the trailing-12-month (TTM) period, the EV maker boasts an impressive ally in Amazon(NASDAQ:AMZN). Amazon is Rivian’s largest customer and owns roughly 20% of the company. Furthermore, the e-commerce giant has a massive pre-order for 100,000 delivery vans that is set to be completed by 2025. Analyst Adam Jonas believes the pre-order figure will increase to 300,000.
As of now, valuation, scalability and execution by management remain the biggest concerns. Before making an investment, investors need to sit down and rationalize whether Rivian can make enough deliveries in the future to support its current sky-high market capitalization of $90 billion.