One Wall Street Analyst Has 98% Upside to Rivian Stock

As with most stocks, theRivian Automotive (NASDAQ Resonance Symbol: RIVN)shares also took a hit Wednesday as higher-than-expected inflation data dashed investors' hopes for a series of rate cuts by the Fed in 2024. ButBank of Americasaid that there was no need to worry.

Inflation or not, interest rate cuts or not ...... According to analysts at Bank of America, Rivian's stock price will more than double in a year to $21 per share.

Is Rivian stock worth buying?

Rivian's stock closed just shy of $11 per share on Tuesday before the target share price was announced, so if the stock reaches $21 per share, new investors will be rewarded with a 98% return over the next year or so.in the event that Bank of America analyst John Murphy is right, so this is very exciting news for investors. But hebeIs that right?

Murphy says investors are concerned about demand for electric vehicles from car buyers - so it makes sense to say "demand" is important to Rivian. After all, last year Rivian produced 57,232 electric trucks ...... butdemand (economics) It was very weak, with only 50,122 deliveries to willing buyers. In the short term, it's really important for Rivian to increase demand - perhaps that's why Rivian has just offered a free $5,000 paint job on new Rivian purchases to increase demand.

But in the long run, I think Rivian'sProduction capacityThe ability to produce the new R2 and R3 electric SUVs, in particular, is a more important factor in the expansion of Rivian's stock.

That's because it costs Rivian nearly $6 billion in cash each year just to produce and sell the R1T electric truck and R1S electric SUV. But Rivian(used form a nominal expression) Bank deposits amount to only about US$9.4 billion. As a result, unless Rivian is able to successfully start production of R2 within the next 18 months or so, Rivian will run out of cash and will need to find additional funding to complete the project.

Incidentally, Rivian's R2 is due to hit the market in early 2026, which is over 18 months away. Regardless of "demand", any delay in production of the new EV will only worsen Rivian's cash position.Rivian investors, take note.

Should you invest $1,000 in Rivian Automotive now?

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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Rich Smith has no position in any of the above stocks.The Motley Fool holds a recommendation for Bank of America.The Motley Fool has a disclosure policy.

A Wall Street Analyst Says Rivian Stock Has 98% Upside was originally published by The Motley Fool.