Rivian company
RIVIAN AUTOMOTIVE
-7.38%
closure:0
opening:13.83
High:13.91
low:13.16
cycle:—
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The maker of electric commercial vehicles receives a downgrade to “neutral” from “overweight” from Piper Sandler, after the investment bank said the electric vehicle maker will struggle with high expenses and will have to face financial challenges and obtain additional financing in order to continue to exist.
Piper Sandler also lowered its target price for Rivian stock to $15 from $63. “We still like Rivian’s strategy, which uses vertical integration to achieve after-sales revenue (software, services, charging),” said analyst Alexander Potter, “The problem is that this strategy is expensive, in order for Rivian to justify its cost structure, the company must spread its investment over millions of units (just like Tesla does) and in order to finance this aggressive expansion, Rivian must raise.”
The analyst also added that in order for Rivian to be able to improve its cash burn, the company must control every expense from the beginning of the production of a vehicle to its end and said that Rivian has the right brand to compete with the best companies in the industry, but it will have to cut expenses and get some components from outside instead of manufacturing them itself, like the batteries and the software.
The previous rating given to the company was based on the thought that the company would be able to produce 3 million vehicles per year, while in practice the company produces between 500 thousand and 700 thousand vehicles per year. “Given cash constraints and a volatile market, we think most investors are not willing to pay right now for Rivian’s long-term prospects.” Potter said
Rivian trades at a value of 12 billion dollars and has dropped 28% since the beginning of the year, with a 68% drop for the entire year
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