Sign InRivian Automotive (RIVN) Analysis: Technical Indicators Point to Potential Price Movement
Summary
As of August 7, 2023, Rivian Automotive (RIVN) closed slightly below its resistance level, but technical indicators suggest some potential for upward momentum and price movement in either direction; with a negative PE ratio and upcoming earnings announcement, a short-term hold recommendation is suggested, but long-term investors may consider buying due to the implied upside based on DCF and consensus target price, although they should be cautious of challenges in the EV industry and potential price wars.
Technical Analysis of Rivian Automotive, Inc. (Ticker: RIVN)
As of August 07, 2023, Rivian Automotive (RIVN) closed at $24.28 with a noteworthy change of -0.98 (-3.88%). Although the stock has proven to be slightly volatile with an average true range of 7.19, it is currently sitting slightly below its resistance level of $24.7. RIVN's 50-day moving average ($19.63) and 200-day moving average ($20.03) suggest a slightly bullish outlook, given that the last close price is above these averages.
However, the relative strength index (RSI14) is hovering at a neutral 48 with the MACD for the last three months showing a positive trend at 2.88, suggesting some potential for upward momentum. The trading volume of 38.01 million was below its average trading volume of 49.31 million. Based on these technical indicators, the potential for price movement to either side exists.
Fundamental Analysis of Rivian Automotive, Inc.
Rivian Automotive (RIVN) has a market capitalization of $22.62 billion. Given the negative EPS of $-7.1, the stock has a negative Price to Earnings (PE) ratio of approximately -3.42, reflecting the company's discouraging financial health.
Significant attention surrounds RIVN's upcoming earnings announcement scheduled on August 08, 2023. According to one recent report, there is a positive revision in earnings estimates, which could positively affect the stock's performance. Furthermore, the company produced 13,992 electric vehicles (EVs) and successfully delivered 12,640 EVs in the second quarter, demonstrating robust output capability.
However, a price war among EV manufacturers may challenge Rivian, as suggested by a recent news report highlighting promotional price cuts by Lucid Motors. It is crucial to consider industry trends in the evaluation, as EV market dynamics can significantly influence Rivian's performance.
The discounted cash flow (DCF) model provided an estimated value of $36.95 for RIVN, indicating that the stock may be undervalued.
Outlook and Recommendation
If the company manages to surpass expectations in the earnings announcement, it could push the stock price higher in the short term. The stock's high analysts' target of $147 and low target of $14 reflect considerable diversity in forecasts with a consensus target price of $53.95, suggesting optimism about the company's future.
Given the stock's current technical and fundamental status and pending earnings report, a short-term HOLD recommendation is suggested. However, for the next trading week, assuming a good earnings report, the stock could break its resistance and potentially re-challenge its year high of $40.86.
For potential investors considering a long-term position, the implied upside based on DCF and consensus target price may suggest a BUY recommendation. However, investors should account for the challenges in the EV industry, including rising competition and potential price wars. These factors, coupled with Rivian's negative PE ratio, imply a risk in the investment prospects.
