Rivian stock remains on edge today, March 20, as investors focus on the large investment and order from Uber. After rising by nearly 4% on Thursday, the stock pulled back by over 1% on Friday as traders sold the recent news.
Uber’s investment in Rivian provides it with the much-needed cash
Rivian stock is in the spotlight after Uber revealed a plan to invest $1.25 billion in it. In return, Rivian will help the company deploy up to 50,000 robotaxis through 2031.
As part of the deal, Uber committed to buy 10,000 autonomous versions of the upcoming R2 vehicle. R2 is a smaller version of the existing Rivian vehicles that is aimed at the mass market. It will start selling at $57,990, lower than the existing models that start at $70,000.
Rivian plans to launch a cheaper R2 vehicle starting at $45,000 in 2027, and another R3 model after that.
According to the statement, Uber will invest the first $300 million in Rivian later this year. The other four tranches will happen through 2031. At the same time, Uber will pay Rivian some licensing fees to use its autonomous driving system.
Rivian has made some major deals in the past, with the most significant one being its partnership with Volkswagen. Its $5.8 billion partnership with Volkswagen has seen it provide software-related services to the giant automaker.
Uber, on its part, has made several deals as it seeks to leverage autonomous technology to cut costs. It has deals with companies like Lucid and Stellantis, the parent of Jeep and Chrysler.
Analysts predict Rivian’s revenue growth to continue
One potential catalyst for the Rivian stock price is that the ongoing Iran war has led to a surge in energy prices. Gasoline and diesel prices have jumped by over 40% since the Iran war started. As such, there is a possibility that more American customers will shift from ICE vehicles to EVs.
Data compiled by Yahoo Finance shows that analysts predict that its annual revenue will jump by 30% this year, driven by the upcoming R2 vehicles. This growth will then be supercharged by 65% next year to over $11.4 billion.
Most importantly, Rivian is now on a path towards profitability. Its earnings per share (EPS) is expected to be a loss of $2.96, an improvement from $3 last year. It will then lose $2.44 next year.
There are two main risks that will cloud this outlook. The first one is that the R2 vehicles may not sell as rapidly as Wall Street analysts predict.
Also, the company may be forced to raise more money because of the stubbornly high cash burn. It ended last year with over $6 billion in cash, which may run out in the coming quarters.
Rivian stock price technical analysis
The daily timeframe chart shows that the RIVN stock price has remained in a narrow range. As a result, it has slowly formed a symmetrical triangle pattern whose two lines are nearing their confluence.
The stock is consolidating at the 50-day and 100-day Exponential Moving Averages. Also, the Awesome Oscillator remains slightly above the zero line. Therefore, with the symmetrical triangle nearing its confluence, chances are that it will have a big move in either direction in the coming weeks. The key support and resistance levels will be at $10 and $20.
