Rivian Automotive (NASDAQ: RIVN) stock plummeted as JPMorgan downgraded it due to disappointing earnings.
JPMorgan has downgraded electric vehicle maker Rivian (RIVN) from Underweight to Neutral, slashing its price target by half to $11 from the previous estimate of $20. Analysts at JPMorgan cited several concerns, including issues with Rivian’s backlog, growth prospects, pricing strategy, and margins.
The investment bank’s analysts said,
“We are downgrading shares of Rivian Automotive (RIVN) to Underweight from Neutral after slashing our estimates and price target to account for substantially slower growth amidst continued large losses.”
They added,
“The company has fallen far short of its own targets for vehicle sales and production, let alone the seemingly much more ebullient expectations of its investors, and disappointing new guidance revealed yesterday implies essentially no growth in 2024 (in our view strongly hinting at growing demand problems that leave little likelihood for a re-acceleration of growth until at least 2026.”
The downgrade comes after Rivian disclosed its fourth-quarter earnings, revealing an adjusted EPS of -$1.36, which fell below the consensus of -$1.32. The shortfall was attributed to higher-than-anticipated costs. However, the company’s revenue of $1.32 billion beat forecasts by $60 million.
Rivian has also issued its full-year production and EBITDA guidance, aiming to produce 57,000 units and expecting an EBITDA loss of -$2.7 billion. While this outlook is slightly more positive than the current consensus, it signifies a minor decrease from the 57,232 vehicles produced in 2023.
The company wrapped up 2023 with a cash and short-term investments balance of $9.4 billion, marking a decrease from $11.6 billion at the end of the previous year.
Rivian (NASDAQ: RIVN) Stock Reaction
RIVN stock plunged 25.60% to close at $11.45 on Thursday. The traders had exchanged hands with 189,992,003 (189.99 million) shares compared to the average daily trading volume of 33.62 million.
