© Reuters Rivian Automotive (RIVN) cuts Barclays because technology is not enough to avoid electric vehicle winter
Barclays downgraded electric vehicle company's shares Rivian Automotive (NASDAQ to Equal-Weight from Overweight in a note on Monday, lowering the stock's price target to $16 from $25 per share.
Analysts told investors that their downgrade is based on three factors, the first being that the company has a great product, but its technology is not enough to prevent further signs of demand pressure amid a broader slowdown in prices. electric vehicles.
Secondly, the bank believes that weak demand implies pricing risk and slower volume growth. As a result, there is a “longer path to breakeven.”
“Signs of demand weakness emerged last year in EDV and R1T, but we expected demand to remain resilient for R1S, supported by strong
“But that is no longer the case: recent R1S stock unit sales data and the accelerated launch of a (likely margin-diluting) standard-range version apparently indicate weakened demand.”
Barclays also sees a continued need for capital raises in Rivian. They said the consequences of weak demand are significant.
Not only does it mean volume prospects are in question, it also presents potential price risk, with both points reinforcing that RIVN is likely to fall short of its 2024 target of reaching gross margin profitability.
“Furthermore, given continued capital needs in view of preparation for large R2 volume in 2026, we see future pressures,” the bank concluded.
