Rivian Automotive (RIVN) shares were downgraded to Equal-Weight from Overweight by Barclays in a note on Monday, with the stock price target lowered to $16 per share. Analysts based their downgrade on three factors. The first is that while the company has a great product, its technology is not enough to avoid 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. Additionally, recent data points from the sales of R1S inventory units and the accelerated launch of a Standard range version suggest softened demand. These factors have led analysts at Barclays to conclude that ongoing capital raises are necessary for Rivian, as weak demand poses both a volume and pricing risk.
The consequences of weak demand also mean that RIVN is likely to miss its 2024 target of reaching gross margin profitability. Moreover, with ongoing capital needs given preparation for the high volume R2 in 2026, analysts see future pressure for the company. Despite these challenges, analysts at Barclays maintain that they hope for resilient demand for R1S in the future.