Rivian Automotive falls after Barclays warns on EV demand slowdown

Electric Vehicle Company Rivian Sets IPO

Spencer Platt/Getty Images News

Rivian Automotive (NASDAQ:RIVN) headed lower in premarket trading on Monday after Barclay downgraded the electric vehicle stock to an Equal Weight rating after having it slotted at Overweight. The firm pointed to a broad EV market slowdown, demand pressures, and more supply constraints.

Analyst Dan Levy said Rivian (RIVN) offers a great product and technology, but warned that softer demand trends could pose a profit risk, with slower volume growth making it harder for the company to achieve positive margins and cash flow. For investors, Rivian’s (RIVN) ongoing need for capital raises is seen holding back share price appreciation.

“The consequences of weak demand are significant. Not only does it mean that the volume outlook is challenged, but it also presents potential pricing risk – with both points reinforcing RIVN is likely to miss its 2024 target of reaching gross margin profitability,” updated Levy. “Moreover, with ongoing capital needs given preparation for the high volume R2 in 2026, we see future pressure,” he added.

Barclays lowered its price target on Rivian Automotive (RIVN) to $9 from $16.

Shares of Rivian (RIVN) fell 3.06% in premarket trading to $16.17 vs. the 52-week trading range of $11.68 to $28.06.

Rivian Automotive (RIVN) is due to report earnings on February 21. Analysts expect Rivian (RIVN) to report revenue of $1.26B and a EPS loss of $1.32. Rivian (RIVN) has posted a narrower-than-expected loss in its last seven quarters.

William Murphy

Related post