KEY POINTS

  • A notable expert thinks that Rivian stock is a good buy.
  • Several electric vehicle names rose today after hefty declines over the previous month.

What’s going on with EV stocks

Investors can thank them because Rivian was driving EV stocks higher Tuesday. Several U.S.-based electric vehicle (EV) firms saw their shares rise Tuesday, and investors can undoubtedly attribute this to Rivian Automotive (NASDAQ:RIVN). Rivian stock climbed by 11.2%, helping other EV names such as Lucid Group (NASDAQ:LCID) gain 6% and Nikola (NYSE:NKLA) gain 6.8%.

After the early surges, all three EV stocks receded somewhat. However, as of the market close, shares of Rivian, Lucid, and Nikola were retaining gains of 10.58%, 2.82%, and 8.81%, respectively. There was a lot of evidence why Rivian stayed the most formidable of the group.

Why we care

The entire electric vehicle industry has seen substantial stock losses due to manufacturing and price headwinds. However, Rivian CEO RJ Scaringe provided some new optimism. Scaringe filed a document Monday indicating he just bought more than $1 million in his firm’s stock. Investors often point out that there may be several causes for selling a stock. However, there is only one reason why an insider buys a company’s common equity – they anticipate it will rise.

In a note that seems to back up Scaringe’s claims, well-known Morgan Stanley (NYSE:MS) analyst Adam Jonas kept the same buy rating on Rivian shares as previously. He lowered the stock’s price target from $85 to $60 per share. That is an increase of more than 140% above Monday’s closing price.

What now

In early 2022, Rivian and Lucid both lowered vehicle production goals for the year. However, when they released first-quarter results, neither company revised its reduced forecasts. Rivian had claims that it has the equipment and processes to produce 50,000 electric vehicles this year. However, it only expects to build 25,000 of them due to component shortages from supply chain issues.

According to the Morgan Stanley note, Jonas said he doesn’t think Rivian will reach that goal. He feels that Rivian may only make 15,500 vehicles this year. He’s also cut production forecasts for 2023, 2025, and 2030. However, based on his price target, he still sees a lot of upside for the shares with his more conservative outlook.

Rivian and Lucid anticipate expanding production in the next several years with new manufacturing facilities coming online, thanks to their shared vision for long-term success. After the CEO’s demonstration that he believes the development will result in a higher stock price, investors rushed to purchase shares in the sector today.

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