• Mon. Feb 26th, 2024

Rivian Automotive Stock Downgraded by Barclays: Demand Pressure, Capital Needs and Ongoing Operational Pressure


Feb 12, 2024
Barclays cuts Rivian Automotive citing technology shortcomings in facing the EV market downturn

On Monday, Rivian Automotive (RIVN) saw its shares downgraded to Equal-Weight from Overweight by Barclays. The stock price target was also lowered to $16 per share from the previous $25. Analysts based their downgrade on three factors.

The first factor is that while Rivian has a great product, its technology is not enough to avoid increased signs of demand pressure amid a broader EV slowdown. Secondly, the bank believes that demand softness implies risk from pricing and slower volume growth.

Signs of demand weakness in EDV and R1T emerged last year, but analysts 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 due to weak demand. Not only does it mean the volume outlook is challenged, but it also presents a potential pricing risk, with both points reinforcing RIVN’s likelihood of missing its 2024 target of reaching gross margin profitability. Furthermore, with ongoing capital needs given preparation for the high volume R2 in 2026, analysts see future pressure on the company’s operations.

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