© Reuters Rivian Automotive (RIVN) reduce at Barclays as know-how not sufficient to keep away from EV winter
Barclays downgraded shares of electrical automobile firm Rivian Automotive (NASDAQ:) to Equal-Weight from Obese in a observe Monday, decreasing the inventory worth goal to $16 from $25 per share.
Analysts informed buyers that their downgrade is predicated on three elements, with the primary being that the corporate has an incredible product, however its know-how isn’t sufficient to keep away from elevated indicators of demand strain amid a broader EV slowdown.
Secondly, the financial institution believes demand softness implies threat from pricing and slower quantity progress. Consequently, there’s a “longer path to breakeven.”
“Indicators of demand weak spot in EDV and R1T emerged final yr, however we hoped that demand would stay resilient for R1S, underpinned by a stable
backlog,” defined the analysts. “However that’s now not the case – latest knowledge factors from the gross sales of R1S stock models and the accelerated launch of a Normal vary model (possible margin dilutive) seemingly point out softened demand.”
Barclays additionally sees an ongoing want for capital raises at Rivian. They mentioned the results of weak demand are vital.
Not solely does it imply the amount outlook is challenged, nevertheless it additionally presents a possible pricing threat, with each factors reinforcing RIVN is prone to miss its 2024 goal of reaching gross margin profitability.
“Furthermore, with ongoing capital wants given preparation for the excessive quantity R2 in 2026, we see future strain,” the financial institution concluded.