Today’s price action in the market has been rather turbulent, for many key sectors. In the electric vehicle (EV) space, companies are seeing varying moves, with Rivian (NASDAQ:RIVN) moving up alongside the broader sector. At the time of this writing, RIVN stock is up around 0.5% despite a rather bearish recent analyst note from Deutsche Bank today.
Deutsche Bank lowered its price target from $19 to the $16 level while maintaining a “hold” rating on RIVN stock. This downgrade appears to be tied to Rivian’s recent move to offer a cheaper battery pack configuration called “Standard+.” Essentially, Deutsche Bank believes this move is tantamount to a significant price cut and may hurt the company’s financials more than expected.
Let’s dive into what to make of this price target cut — and whether this note will shift investors’ opinions of the company.
RIVN Stock Moves Higher Despite Bearish Analyst Note
Now, it’s worth pointing out that Rivian is still losing a tremendous amount of money per vehicle it sells. Much of that has to do with the fact that Rivian is still ramping up production and these losses should narrow over time. That said, producing lower-margin versions of the R1T and R1S could elongate the path to profitability for the company, something Wall Street clearly doesn’t like to see.
This move, as a proxy for a price cut, could also signal to the market that demand for Rivian’s trucks may be waning. I’m not sure that’s the conclusion everyone in the market will arrive at. But it’s a narrative that’s starting to build, as many competitors slash prices to remain relevant in the race for EV market share.
To be sure, Rivian has a unique offering in this space and is among the leaders in the U.S. light truck and SUV market. I think Rivian’s positioning is noteworthy and the fact that RIVN stock is brushing off this note today suggests long-term bulls aren’t selling on these kinds of headlines. That seems like a decent setup for long-term investors and Rivian is certainly an EV stock I’m watching closely right now.
On the date of publication, Chris MacDonald 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.
