Rivian Automotive Inc. has “leading technology,” according to Barclays analyst Dan Levy — but that may not be enough to help it withstand a challenging market.
Levy previously thought Rivian’s
standout product and technology meant the company had “three legs of demand,” with one for each of its products — the EDV commercial van, the R1T pickup truck and the R1S sport-utility vehicle. While he saw demand challenges for the first two last year, he thought R1S demand would hold up, but that’s “no longer the case.”
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“[R]ecent data points from the sales of R1S inventory units and the accelerated launch of a Standard range version (likely margin dilutive) seemingly indicate softened demand,” Levy wrote.
In his view, “the EV winter appears to have taken a toll,” and Rivian can’t escape those broader pressures, even though it serves a more niche market than rivals and has a passionate base of fans.
Levy now sees “significant” consequences of this sluggish demand.
“Not only does it mean that the volume outlook is challenged, but it also presents potential pricing risk — with both points reinforcing RIVN is likely to miss its 2024 target of reaching gross margin profitability,” he wrote.
Further, “with ongoing capital needs given preparation for the high volume R2 in 2026, we see future pressure,” he added.
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Levy downgraded Rivian’s stock to equal weight from overweight in a Monday note to clients, while cutting his price target to $16 from $25.
He commented that he declined to move to an underweight rating on Rivian shares, “given our appreciation of RIVN’s long-term narrative/exposure to megatrends” that should help its stock maintain “a core base of demand.”
Rivian’s stock was off nearly 2% in Monday morning trading.