Rivian Stock Plunges After UBS Rating Downgrade

Rivian Automotive (RIVN) shares sank on Friday for the fifth straight session after the Union Bank of Switzerland’s (UBS) rating downgrade.

The stock dropped 12.05% to $10.07 per share on February 23 but recovered slightly by 0.60% after-hours. Nevertheless, analysts anticipate a 3.91% dip to $9.68 apiece in the coming market session.

The American electric vehicle (EV) manufacturer lost 38.41% last week, including a 25.60% dip on Thursday, the worst in its history. This year, it has already shed 57.08% as it struggled to produce and sell vehicles domestically and abroad.

UBS lowered its rating for the automaker from Buy to Sell, revising its stock price prediction from $24.00 to $8.00. It added that the falling global demand amid the shrinking buyer pool of wealthy consumers is yet to have an EV.

Moreover, the Swiss bank said most consumers find the price of the current pool of Rivian vehicles prohibitive. The base version of the California-based firm’s R1T electric pickup truck costs $70,0000.00, while its R1S SUV starts at $75,000.00.

Industry experts claimed the EV maker is on track for its worst quarterly decline since its initial public offering (IPO) in November 2021. It starkly contrasts with the 167.00% year-over-year (YoY) revenue growth it reported in the fourth quarter of last year.

UBS Says Layoffs Prove Low Demand for Rivian EVs

On Wednesday, Rivian announced a 10.00% workforce cut as it projects production of 57,000 vehicles, prompting the UBS downgrade. The figure is slightly lower than the 57,232 units produced in 2023 and 30.23% under the 81,700 Wall Street estimates.

Furthermore, the firm anticipates deliveries to fall by 10.00% this year after rising by over 100.00% to 50,122 in 2023. Meanwhile, Deutsche Bank revised its expectations downward by 23.08% from 65,000 to a flattish 50,000 units.

Rivian CEO RJ Scaringe reassured investors, saying the company-wide cost transformation program will help mitigate losses. However, UBS argued that challenging macroeconomic conditions and geopolitical uncertainties would make it difficult for the automaker to recover.

The EV manufacturer has yet to post a profit. In Q4 2023, the firm reported a net loss of $1.52 billion, which was annually 11.63% more than the $1.72 billion net loss in Q4 2022.

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