• Wed. Feb 21st, 2024

Barclays Downgrades Rivian Automotive from Overweight, lowers stock price target, sees ongoing need for capital raises amidst EV slowdown


Feb 12, 2024
Barclays cuts Rivian Automotive citing technology shortcomings in facing the EV market downturn

In a note on Monday, Barclays downgraded Rivian Automotive (RIVN) from Overweight to Equal-Weight, while also lowering the stock price target from $25 to $16 per share.

The downgrade was based on three factors. Firstly, analysts noted that despite having a great product, the company’s technology may not be enough to avoid increased signs of demand pressure amidst an overall EV slowdown. Secondly, they believed that demand softness implies risk from pricing and slower volume growth. Finally, analysts pointed out that recent data showed signs of demand weakness in EDV and R1T last year, but 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 that this hope may have been misplaced.

Barclays also sees an ongoing need for capital raises at Rivian due to the consequences of weak demand. Not only does it mean the volume outlook is challenged, but it also presents a potential pricing risk with both points reinforcing that RIVN is likely to miss its 2024 target of reaching gross margin profitability. Additionally, with ongoing capital needs given preparation for the high volume R2 in 2026, Barclays foresees future pressure.

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