Barclays downgraded shares of electric vehicle company Rivian Automotive (NASDAQ: RIVN) from Overweight to Equal-Weight in a note Monday and lowered the stock price target from $25 to $16 per share. The analysts cited three main reasons for the downgrade. First, while the company has a great product and technology, it may not be enough to avoid the increased signs of demand pressure amid a broader EV slowdown. Secondly, the bank believes that demand softness implies risk from pricing and slower volume growth. Finally, Barclays also sees an ongoing need for capital raises at Rivian.
The analysts elaborated that signs of demand weakness in the EDV and R1T emerged last year, and recent data points from the sales of R1S inventory units and the accelerated launch of a Standard range version indicate softened demand. This suggests that Rivian is likely to miss its 2024 target of reaching gross margin profitability. Additionally, the bank concluded that the consequences of weak demand are significant, including a challenged volume outlook and potential pricing risks.
Barclays also noted that, with ongoing capital needs given preparation for the high volume R2 in 2026, they see future pressure on the company.