As we head into 2024, the electrical car (EV) area stays one of the intently watched by buyers. All informed it is had an honest yr, however one which’s removed from its finest. The World X Autonomous & Electrical Automobiles ETF NASDAQ: DRIV is ready to complete 2023 with round a 25% achieve, having been barely constructive as lately as October. 

Enhancing inflation readings and the prospect of falling rates of interest has helped so much, with one inventory particularly shining brighter than most others: Rivian Automotive Inc NASDAQ: RIVN. Whereas its shares have nearly managed to match the annual return from the broader EV ETF, whereas being far outpaced by the king of EV, Tesla Inc NASDAQ: TSLA, who’s returned 140% this yr, it is nonetheless closing the yr out sturdy. 

Rivian shares are up 53% because the center of November, greater than twice that of Tesla’s 21% return and virtually 4 instances that of the DRIV ETF’s 14% return. So, whereas it mightn’t have been the strongest yr general, for these of us on the sidelines contemplating some EV publicity heading into January, Rivian’s efficiency over the previous few weeks alone has made it clear it must be thought of. 

Bullish improve

The workforce at Stifel was onto this earlier this month once they upgraded their ranking on Rivian inventory. They acknowledged the continued headwinds hurting the {industry} as a complete, particularly vary nervousness, car prices, and perceived lackluster charging infrastructure, however see Rivian as being well-prepared to outperform its friends over the approaching quarters.

A lot of this bullishness comes from Rivian’s distinctive strengths, comparable to its high-quality R1S/R1T fashions, which have been driving model consciousness. There’s additionally the corporate’s strategic settlement with Amazon.com Inc NASDAQ: AMZN for 100,000 electrical supply automobiles and its potential to promote its vans to different fleets now. 

This growth into the broader industrial car market with its electrical vans will supply important price financial savings for companies, probably revolutionizing sustainable transportation​​ whereas making Rivian the go-to identify out there. As well as, the corporate’s margins are set to enhance all through 2024, with higher pricing, new provider agreements, and rising manufacturing all lending their weight to the corporate’s progress potential. 

On prime of that, the industry-wide headwinds which have finished a lot injury lately do seem like abating, with inflation wanting more and more tamed and the prospect of rate of interest cuts very a lot on the desk heading into 2024. 

Additional positive factors anticipated 

Rivian is coming into 2024 with a street-high worth goal of $44, which is pointing to an extra upside of practically 100% from the place shares had been buying and selling this week. This could have shares again buying and selling at their highest ranges since April of final yr, which might be a exceptional turnaround. It was solely this previous summer season that the inventory was printing all-time lows, having fallen greater than 90% from its highs. 

It is unlikely to be all one-way site visitors, nonetheless. Regardless of all of the positives talked about above, Rivian faces the standard challenges, comparable to elevated competitors throughout the board and the necessity for continuous innovation to remain forward of the ever-increasing quantity of EV friends. Its profitability, particularly its lack of it, can also be an ongoing concern and one which administration shall be keen to deal with within the yr forward. However issues are trending in the fitting course, and other than a small slip earlier this yr, Rivian has constantly posted file quarterly income numbers since going public in 2021. 

Its shares have bounced laborious from the $15 degree, the place they traded down in November, and they’re encountering some resistance proper now across the $24 mark. This can be no unhealthy factor, although, because it’s permitting the inventory’s relative power index to chill from the red-hot readings it was beginning to give, which units Rivian shares up properly for the subsequent stage of the rally to start subsequent month. 

Earlier than you contemplate Rivian Automotive, you may need to hear this.