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Rivian Enthusiasm Turns to Skepticism After $117 Billion Wipeout -Breaking

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© Reuters Rivian Enthusiasm Turns to Skepticism After $117 Billion Wipeout

(Bloomberg) — Wall Street’s embrace of Rivian Automotive Inc., last year’s electric-vehicle startup darling, is waning already as the company has lost about $117 billion in market value in just four months. 

Analysts are paring back their expectations for this once-hyped stock ahead of Rivian’s fourth-quarter results, which are due after the market close on Thursday. Bloomberg data indicates that four of the analysts have reduced their prices by at least 40% this month.  

There are concerns the conflict in Ukraine could further complicate the severe supply-chain problems which plagued last year’s auto industry.  

“With investors increasingly concerned about Rivian’s production ramp combined with its inability to combat cost inflation with price increases, we have trimmed our price target to $47 from $115,” Barclays Brian Johnson, analyst at (LON) wrote a note for clients on March 8th. Johnson maintained his Hold equivalent rating for the stock. 

The electric-truck manufacturer’s initial public offering in November coincided with heightened investor appetite for all things EV, driving its market valuation to $153 billion at its peak a few weeks after the IPO. The market is today at $36 Billion, just four months after the initial public offering in November. There are growing concerns about inflation and tightening monetary policy. 

Given the soaring cost of lithium and nickel, these sector headwinds will be a major burden on newer EV businesses. But Rivian’s challenges go much further, as seen in the company’s recent flipflop on a decision about the price of its trucks. 

Rivian said on March 1 that it would raise the prices on its debut vehicles for retail buyers, citing “unprecedented” supply-chain shortages. It then reversed course two days later after it was hit with customer cancellations. Investors were not happy with the decision, which saw the stock drop 32% in five trading sessions.

“Rivian needs to reassure its investors and customers that it has a handle on its supply chain and can accurately forecast what its costs will be and how it will price its trucks,” said Greg Martin, managing director and co-founder of Rainmaker Securities. 

Rivian’s average analyst price target is $116. It has 11 buy ratings, 4 recommending holding, and 1 sell rating. Despite all its flaws, Rivian still ranks as the best-positioned startup for the rapid growing EV marketplace.

Wedbush analyst Daniel Ives, whose last published note on the company was on Dec. 17 after the third-quarter results, is waiting for the company’s 2022 production target in order to update his model. Rivian’s “fair value is now dependent on its Street credibility,” he said.  

©2022 Bloomberg L.P.

 

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