Rivian is expected to produce fewer cars than Wall Street had anticipated this year.
Courtesy Rivian
Wall Street has been pretty positive on Rivian Automotive stock, despite some rocky trading out of the gate for the electric-truck start-up. Now, shares have their first Sell rating from a large broker.
Monday, Exane BNP Paribas launched coverage of Rivian (ticker: RIVN) stock with a Sell rating and a target of $35 for the price, according to the news aggregation service the Fly on the Wall. Analyst Dorothee Cresswell says Rivian is a real EV player, but that recent pricing actions demonstrated that the company’s initial products—a pickup truck and SUV—were “structurally unprofitable.”
Rivian raised prices roughly 20% in early March. Initially, the price increase applied to new and existing reservations, but customers were upset, and the share price was hammered. Rivian rolled back the increases almost immediately on existing reservations, but shares were still down about 37% since the pricing move as of the close on Friday. The Nasdaq Composite is up about 1% over the same span.
The company didn’t immediately respond to a request for comment.
Shares initially reacted poorly to the Sell call, with a loss of about 3.1% in premarket trading, but then reversed course for a gain of about 4% after the open. The S&P 500 and Dow Jones Industrial Average were off about 0.8% and 0.3%, respectively.
The condition of the stock coming into Monday might explain the move. Shares have been beaten up badly. Rivian stock closed this past week at $38.80. Coming into Monday trading, Rivian stock was off about 63% year to date. Shares were off about 78% from their November 52-week high of almost $180 a share.
Inflation and rising interest rates have hurt shares of most high-growth companies. but Rivian has its own troubles. In addition to its reversal on pricing, the company is now expected to produce about 25,000 vehicles in 2022. Before that news emerged in March, Wall Street was looking for about 40,000 units.
Overall, about 69% of analysts covering the stock rates share at Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 58%. The Exane BNP Paribas call means that about 6%, of analysts covering Rivian stock rate shares at Sell, about the same ratio as for stocks in the S&P 500.
The $35 price target is far below average. The average analyst price target is about $79 a share, more than double Exane’s.
Write to Al Root at [email protected]
