Rivian downgraded as concerns about cash burn remain

on Apr 14, 2023
  • Piper Sandler downgraded Rivian stock from overweight to neutral.
  • The analysts expect the company from overweight to neutral.
  • Analysts have a mixed outlook of Rivian as a price war intensifies.

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Rivian (NASDAQ: RIVN) received another downgrade on Friday as concerns about the company’s future remains. In a note, analysts at Piper Sandler downgraded their rating of the company from overweight to neutral. They expect that the company, which is a cash incinerator, will need to raise additional capital to implement its current strategy. Precisely, they expect that the company will need to raise $4 billion,.

Analysts have a mixed outlook of Rivian stock.In March, analysts at Needham and Bank of America initiated their coverage with a buy rating. The two expect the shares to jump to $26 and $40, respectively. 

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On the other hand, analysts at Mizuho, Evercore ISO, Morgan Stanley, RBC, and DA Davidson all lowered their target. Most of these firms cited the company’s increased cash burn as it lost over $6 billion in 2022.

The most recent Rivian news was its monthly car delivery report. In a note, the company said that it sold 7,946 in the first quarter, which was better than what analysts were expecting. The firm said that the company was on track to produce 50k jobs this year.

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Rivian and other EV companies are going through a difficult period. On the positive side, companies are seeing lower production cost as key metals like lithium and nickel have dropped sharply this year. This is an important view considering that batteries are some of the most important parts of EVs.

Meanwhile, there is a price war going on. On Friday, tesla announced that it was cutting its prices of the Model Y and Model 3 by up to 10%. The company has slashed prices several times this year as it seeks to boost its sales.

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Rivian stock price has been in a strong bearish trend and is now at the lowest level this year. It crashed by over 4% in the premarket after the rate downgrade.

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