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Guggenheim Just Set an $18 Price Target on Rivian (RIVN) Stock

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After encountering some rough trading sessions, electric vehicle (EV) manufacturer Rivian Automotive (NASDAQ:RIVN) enjoyed a strong performance on Tuesday. Part of the sentiment may be attributed to Guggenheim. The bank’s analysts earlier in the day initiated coverage of RIVN stock with an optimistic view and per-share price forecast.

According to Investing, the Wall Street experts rated Rivian shares a “buy” with an $18 price target. In a research note to clients, the investment firm remarked that it’s optimistic about the EV maker’s upcoming product lineup. “We see a credible path to breakeven gross margin in 4Q24, informed by a detailed margin build and encouraging updates surrounding the 2025 model year R1 lineup,” the analysts wrote.

Per Investing, “they also highlight potential upside to core guidance elements, and a reduction in cash burn. The firm says this will help alleviate some near-term overhang on shares.”

Interestingly, Guggenheim notes that sentiment within the EV sector is presently weak. However, much of the optimism for RIVN stock centers on the underlying entity potentially resonating with a younger and digitally savvy consumer base.

That’s not an unreasonable thesis. According to Cardiff University, younger people essentially care more about sustainability than older cohorts.

Optimism in RIVN Stock Faces Income-Level Considerations

On paper, one of the mainline arguments for RIVN stock makes perfectly logical sense. Rivian is scheduled to launch its R2 SUV in 2026 and its compact R3 in 2027. The EV maker’s website states that the former should start at $45,000. Automotive journal Car and Driver reports that the R3 may start at an estimated $37,000.

These numbers are significant because, among the three attributes that Boston Consulting Group reported were most important among potential EV adopters, one of them was a price tag of under $50,000. So, Rivian’s upcoming vehicles hit the bullseye.

However, where it might fall short — and this is where the contrarianism lies — is in the other two attributes. Prospective EV buyers want a 350-mile-plus driving range and charging times of under 20 minutes. That’s pushing it because Rivian claims the R2 will have an estimated range of over 300 miles.

A more worrying dilemma is the charging component. While fast-charging infrastructure is available in many regions, Car and Driver reported that drivers have faced significant headaches. These challenges include station connectivity problems and internal station faults or errors.

Of course, the central concern is that a direct correlation exists between homeownership and income. In other words, as EV manufacturers lower their consumer income targets, they’re also expanding their dependency on public charging solutions.

With such infrastructure facing its own challenges, the headwinds risk rolling downhill.

On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.

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