Electric vehicle (EV) maker Rivian’s (NASDAQ:RIVN) stock fell after two brokers cut their price targets.
Barclays and Needham both reduced expectations while maintaining buy or overweight ratings. Barclays sees Rivian going to $25 in a year and Needham to $22.
Rivian was due to open this morning at $15 per share, down about 10% from its opening price on Jan. 24. The market capitalization is listed at $14.7 billion.
Could Be Worse. Could Be Tesla.
While Rivian and other EV makers like to claim they are “the next Tesla,” they may be shying away from that designation today. Tesla (NASDAQ:TSLA) fell 8.5% overnight after disappointing earnings.
Tesla’s growth has slowed to a crawl. Long-time bull Dan Ives of Wedbush called its earnings call “a train wreck.”
The problem is that the high end of the EV market is saturated. That’s a problem for Rivian as well as Tesla. Rivian’s R1T pick-up starts at $73,000. It has promised to drop prices to $40,000 when it opens a new plant in Georgia. But that plant is at least two years away.
Meanwhile, Rivian is losing money on every sale. In the third quarter, it lost $3.9 billion, $4.15 per share, on revenue of $3.2 billion. It ended the quarter with $7.9 billion in cash after reporting a negative cash flow of over $3.7 billion in the third quarter. Its next earnings report is scheduled for Feb. 21.
Mid-range buyers want cars priced at $25,000. Chinese EV companies like BYD (OTCMKTS:BYDDF) promise to deliver them. Until the builders come around on price and costs, most American buyers will keep buying hybrids.
RIVN Stock: What Happens Next?
Rivian is now in a race between cost-cutting and financing. Analysts remain hopeful. But it will likely need to raise cash more than once before 2026, with Georgia on its mind.
As of this writing, Dana Blankenhorn 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.
