On Monday, Rivian Automotive (RIVN) saw its shares downgraded to Equal-Weight from Overweight by Barclays. The stock price target was also lowered to $16 from $25 per share.
According to analysts, the downgrade was based on three factors. Firstly, while Rivian has a great product, its technology is not enough to avoid increased signs of demand pressure amid a broader EV slowdown. Secondly, the bank believes that demand softness implies risk from pricing and slower volume growth.
Despite signs of demand weakness in EDV and R1T emerging last year, analysts 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 softened demand.
Barclays sees an ongoing need for capital raises at Rivian, with the consequences of weak demand being significant. Not only does it mean the volume outlook is challenged, but it also presents a potential pricing risk, with both points reinforcing RIVN is likely to miss its 2024 target of reaching gross margin profitability. Moreover, with ongoing capital needs given preparation for the high volume R2 in 2026, Barclays concludes future pressure on the company.