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 per share to $16.
Three factors led analysts to make this decision. Firstly, while Rivian has a strong product line, the company’s technology may not be enough to avoid signs of demand pressure amidst a broader EV slowdown. Secondly, the bank believes that softer demand could pose risks related to pricing and slower volume growth.
Despite hope that demand weakness would remain resilient for R1S, recent data points show that inventory units of R1S have softened sales and an accelerated launch of a Standard range version has caused further concerns about demand.
Barclays also sees an ongoing need for capital raises at Rivian, which could result in significant consequences such as challenges in volume outlook and potential pricing risks. These risks reinforce the likelihood that RIVN will miss its 2024 target of reaching gross margin profitability.