This year has not been very kind to electric vehicle (EV) stocks. Today, Rivian (NASDAQ:RIVN) closed down by about 7%. Year-to-date, the company has lost over 65% of its value. Currently, RIVN stock seems to be down in correlation with large declines in the S&P 500 and Nasdaq 100.
Earlier this year, Rivian also announced that it had decreased its 2022 production guidance from 50,000 vehicles to 25,000 vehicles. In an interview, CEO R.J. Scaringe said he is “really confident” that Rivian will be able to meet this new guidance. Scaringe also estimated that the semiconductor shortage won’t normalize until 2024.
However, Rivian received three price target cuts from Wall Street analysts this week. Let’s dive into the details.
Why Is RIVN Stock Down Today?
This week, Piper Sandler analyst Alexander Potter lowered his RIVN price target from $130 to $112, while maintaining an “overweight” rating. The analyst explained that he expects Rivian to continue its “staggering cash burn,” much like Tesla (NASDAQ:TSLA) did early on. However, Potter believes the company’s long-term potential “will be worth it.” This is because the EV company has a chance to compete in three large segments of the auto market “before Tesla releases competing products.”
Mizuho analyst Vijay Rakesh also recently lowered his price target from $95 to $90 per share, maintaining a “buy” rating. Rakesh believes that Rivian is well-positioned with its EV trucks and commercial delivery vehicle. However, the analyst cautioned that the company is “growing through a grueling learning phase reflective of EV startups.” Further, Rakesh lowered his target before first-quarter earnings; the company has confirmed it will report on May 11 after market close.
Finally, Deutsche Bank also reduced its price target by $1, from $91 to $90 per share. Still, despite the three price target downgrades, an acclaimed EV analyst has reiterated his own “overweight” rating and price target for RIVN stock.
Morgan Stanley Analyst Adam Jonas Reiterates $85 Target
Today, Morgan Stanley’s Adam Jonas reiterated his price target of $85 for RIVN stock. The analyst cautioned that EV penetration in the near term may slow, as EV manufacturers are experiencing a “lack of critical electric metals.” In contrast, Jonas says internal combustion engine (ICE) vehicle companies will benefit from this shortage short-term. These ICE companies will not likely spend money on further ICE research and development either, which benefits them even more.
As a result, this would “leave OEMs milking the ICE cash cow over a fatter deadoption curve than currently appreciated.”
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
