Rivian Automotive (RIVN) Soars 23.24% on $5 Billion Volkswagen Investment: Analysis & Outlook

StockInvest.us, 3 weeks ago

Rivian Automotive Technical Analysis

Rivian Automotive, Inc. (RIVN) experienced a significant uptick in price, closing at $14.74 on June 26, 2024, a 23.24% increase on the day. This surge was fueled by news of a $5 billion investment from Volkswagen, which marks a significant vote of confidence in Rivian's long-term prospects. The stock's trading range for the day was between $14.17 and $16.35, indicating heightened volatility.

The Relative Strength Index (RSI14) stands at 73, signaling that the stock is currently overbought. Typically, an RSI above 70 suggests that the stock may experience a pullback. The 50-day moving average ($10.27) is well below the current price, which indicates bullish momentum; however, the stock remains below its 200-day moving average ($15.23), suggesting long-term bearish sentiment hasn't completely dissipated.

The Average True Range (ATR) of 6.06 reflects high volatility, a trend likely to continue given recent developments. Technical analysis raises concerns about a potential pullback due to the overbought RSI and the stock's price being near a critical resistance level.

Fundamental Analysis

Rivian's market capitalization stands at $14.56 billion, with recent positive developments signaling strong future potential. However, the company remains unprofitable with an EPS of -$5.77 and a PE ratio of -2.55, indicative of its current lack of earnings. The $5 billion investment from Volkswagen and joint venture plans underscore strong growth prospects, but the lack of profitability continues to be a concern.

Analyst sentiment appears generally optimistic, with 18 'buy' ratings and only 2 'sell' ratings. The consensus price target is $34.09, considerably higher than the current price, offering potential upside. Additionally, Rivian's upcoming Investor Day on June 27 offers another catalyst, providing further insights into the company's strategic direction and operational priorities.

Rivian Automotive Predictions for the Next Trading Day and Upcoming Week

For the next trading day, June 27, 2024, anticipation surrounding the Investor Day, coupled with the momentum from Volkswagen’s investment, could drive upward movement initially. However, the overbought RSI and high volatility might lead to some profit-taking, balancing the stock’s performance by the end of the day.

In the upcoming week, the trajectory will likely hinge on the outcomes of the Investor Day. If Rivian’s leadership provides compelling data and strategic clarity, we might see continued positive movement. However, given the high ATR, any adverse information or broader market volatility could trigger a significant pullback.

Intrinsic Value and Long-Term Investment Potential

Evaluating Rivian’s intrinsic value involves recognizing its potential in the burgeoning EV market, augmented by strategic investments from significant players like Volkswagen. As one of the top competitors in the electric vehicle sector, Rivian's long-term potential is notable, driven by innovation and strategic partnerships. However, the lack of profitability and substantial EPS deficit suggests caution.

From a long-term perspective, should Rivian capitalize on its strategic partnerships, achieve scalability, and move towards profitability, its intrinsic value could increase substantially. The EV market's growth and adoption trends bolster this potential.

Overall Evaluation

Considering both technical and fundamental analyses, Rivian Automotive, Inc. is categorized as a 'Hold' candidate. The substantial recent price increase driven by positive news reflects considerable short-term bullish sentiment, whereas the overbought RSI and current lack of profitability suggest exercising caution. The upcoming Investor Day provides a near-term catalyst that will likely shape market sentiment further. Long-term prospects remain promising, contingent on Rivian’s ability to achieve profitability and capitalize on strategic investments.

Check full Rivian Automotive forecast and analysis here.