Barclays cuts Rivian Automotive citing technology shortcomings in facing the EV market downturn

Barclays Downgrades Rivian Automotive: What’s Behind the Analysts’ Decision to Lower Stock Price Target?

Analysts at Barclays downgraded Rivian Automotive (RIVN) from Overweight to Equal-Weight on Monday, with the stock price target lowered to $16 per share. The analysts attributed their decision to three factors.

Firstly, despite having a great product, the company’s technology may not be sufficient to avoid increased signs of demand pressure amidst a broader EV slowdown. Secondly, the bank believes that softer demand could pose a risk from pricing and slower volume growth.

Despite signs of weakness in EDV and R1T emerging last year, 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, which presents potential pricing risks as well as challenges in meeting its 2024 target of reaching gross margin profitability. Furthermore, with future capital needs necessary for preparing for high-volume R2 in 2026, analysts see further pressure ahead.

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