February 27, 2024 9:38 am
Barclays cuts Rivian Automotive citing technology shortcomings in facing the EV market downturn

Rivian Automotive (RIVN) saw its stock price target lowered to $16 per share from $25 by Barclays in a note on Monday, and its shares were downgraded to Equal-Weight from Overweight.

Analysts based their downgrade on three factors. The first is that while Rivian has a great product, its technology is not enough to avoid increased signs of demand pressure amid an EV slowdown. Secondly, the bank believes that demand softness implies risk from pricing and slower volume growth.

The analysts also pointed out that signs of demand weakness in EDV and R1T emerged last year, but hoped that demand would remain resilient for R1S. However, recent data points from the sales of R1S inventory units and the accelerated launch of a Standard range version suggest softened demand.

Barclays also sees an ongoing need for capital raises at Rivian, with the consequences of weak demand being significant. Not only does it mean the volume outlook is challenged, but it also presents a potential pricing risk, with both points reinforcing RIVN is likely to miss its 2024 target of reaching gross margin profitability. Additionally, with ongoing capital needs given preparation for the high volume R2 in 2026, Barclays sees future pressure on the company’s growth prospects.

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