Rivian Automotive (NASDAQ: RIVN) stock dropped over 1% after Mizuho cut its price target.
Rivian Automotive (RIVN), a prominent EV player, has seen a downgrade in its stock assessment. The downgrade, led by Mizuho analyst Vijay Rakesh, comes amidst concerns over near-term headwinds. However, the analysts maintain their belief in the bigger picture.
A report from Seeking Alpha reveals that Rakesh downgraded RIVN stock to “neutral.” Tesla (NASDAQ: TSLA) and Nio (NYSE: NIO) also received this rating.
The price target was also reduced by Rakesh to $12, indicating only an 11% upside from Friday’s close. The previous target was $24. Following this, RIVN shares fell about 2% on Monday before trying to recover some of the losses in afternoon trading.
Rakesh generally holds a positive view of the long-term landscape of EVs, but he believes that near-term concerns might decelerate growth rates. Slowing EV demand and tightening liquidity could pose challenges until the end of 2025. On the other hand, the Mizuho analysts upheld a “buy” rating for General Motors (NYSE: GM), the legacy automotive giant.
Credibility Challenges for RIVN Stock
Rivian (NASDAQ: RIVN), with its stylish electric-powered pickup trucks and SUVs, has become one of the more desirable EV brands. However, it faces significant credibility challenges. It has $9.37 billion in cash and equivalents, but its free cash flow for the last quarter of the previous year comes out to a loss of $1.4 billion. Thus, cash burn remains an ongoing concern.
External factors also compound this problem for RIVN stock. As Mizuho analysts noted, a price war in the Chinese EV market disrupts the international ambitions of the EV industry. Even if a company had no specific plans to enter China, vehicles from the world’s second-largest economy could spill over into other countries, negatively impacting competitiveness.
Furthermore, Tesla initiated a price war that has damaged the industry. Combined with reductions in EV subsidies in the U.S. and European Union, consumer accessibility has become a significant issue. Notably, major automakers have started to scale back or delay their transition to electric-powered mobility. As a result, RIVN stock is in a wait-and-see mode.
Currently, analysts rate RIVN stock as a moderate buy overall. This rating breaks down into 13 buys, eight holds, and three sells. The average price target is $18.24, implying a 71% upside potential from the current price. The most optimistic target goes up to $36.
Rivian (NASDAQ: RIVN) Stock Reaction
RIVN stock fell 1.39% to close at $10.65 on Monday. The traders had exchanged hands with 50,381,539 (50.38 million) shares compared to the average daily trading volume of 42.36 million.
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