Rivian Automotive ( RIVN ) experienced a downgrade of its shares from Overweight to Equal-Weight by Barclays on Monday, along with a reduction in the stock price target from $25 to $16 a share.
According to analysts, three factors contributed to this decision. Firstly, while Rivian has an impressive product, its technology may not be enough to avoid increased signs of demand pressure amidst the broader EV slowdown. Secondly, the bank believes that soft demand implies pricing risk and slower volume growth. Finally, analysts noted that there were indications of weakening demand in EDV and R1T last year but expect demand for R1S to remain resilient. However, recent sales figures for stock R1S units and the accelerated launch of the Standard Offer version suggest reduced demand.
Barclays also sees a continued need for Rivian to raise capital due to the fallout from weak demand. This not only poses a challenge for the volume outlook but also represents a potential pricing risk, both points reinforcing that RIVN is likely to miss its 2024 target of achieving gross margin profitability. Furthermore, with ongoing capital needs in view of preparing for a large volume of R2 in 2026, analysts anticipate future pressure on the company’s finances.