On Monday, Rivian Automotive (RIVN) had its shares downgraded from Overweight to Equal-Weight by Barclays. The stock price target was also lowered from $25 to $16 per share.
According to analysts, there were three reasons for this downgrade. Firstly, despite having a great product, the company’s technology may not be enough to avoid increased signs of demand pressure amidst a broader EV slowdown. Secondly, demand softness implies risk from pricing and slower volume growth. Finally, the analysts pointed out that while signs of demand weakness in EDV and R1T emerged last year, recent data suggests that this trend has continued with the accelerated launch of a Standard range version.
Barclays also believes that Rivian will need ongoing capital raises due to weak demand. Not only does this mean that the volume outlook is challenged, but it also presents a potential pricing risk. Both points reinforce the fact that RIVN is likely to miss its 2024 target of reaching gross margin profitability.
In conclusion, Barclays sees future pressure given ongoing capital needs in preparation for the high volume R2 in 2026.