© Reuters Rivian Automotive (RIVN) cuts Barclays because the technology is not enough to avoid the winter of electric vehicles
Barclays downgraded shares of the electric vehicle company Rivian Automotive (NASDAQ:) to Equal-Weight from Overweight in a note on Monday, lowering the stock price target to $16 from $25 per share.
Analysts told investors that their downgrade is based on three factors, the first of which is that the company has a great product, but its technology is not enough to avoid growing signs of demand pressure amid more large slowdown of electric vehicles.
Secondly, the bank believes that weak demand implies risks from pricing and slower volume growth. As a result, there is a “longer path to breakeven”.
“Signs of weak demand for EDV and R1T emerged last year, but we hoped demand would remain resilient for R1S, supported by solid
backlog,” the analysts explained. “But this is no longer the case: recent R1S inventory unit sales data and the accelerated launch of a version of the Standard range (likely margin dilutive) appear to indicate weakening demand.”
Barclays also sees continued need for capital raises in Rivian. They said the consequences of weak demand are significant.
This not only means that the volume outlook is called into question, but also presents potential price risk, as both points reinforce that RIVN will likely fail to meet its 2024 goal of achieving gross margin profitability.
“Additionally, with continued capital needs given preparation for high R2 volume in 2026, we expect future pressures,” the bank concluded.