Rivian Automotive (RIVN) Stock Analysis: Overbought Conditions Suggest Possible Retracement

Technical Analysis:

Rivian Automotive, Inc. (RIVN) last closed at $23.58 as of September 12, 2023. The stock witnessed a slight change of 0.73% or $0.17. The volume of trade on this day was 23.89 million shares, less than the average of 50.66 million traded over the last three months.

The stock price touched a low and high of $23.06 and $24.46, respectively, during the trading session. The year-to-date data illustrates that RIVN fluctuated within the range of $11.68 (year low) and $40.86 (year high). Given the stock price's recent close, RIVN's market cap stands at $22.17 billion.

Key technical indicators of this stock reveal an overbought condition. The relative strength index (RSI14) is at 79, indicating the stock's price might have pushed to its short-term peak. An RSI above 70 generally suggests a higher likelihood of price retracements.

Drawing the moving averages point, the 50-day moving average of RIVN is $23.49, and the stock price is currently trading marginally above this level. Similarly, RIVN’s 200-day moving average of $18.69 is significant, as the stock price remains above this benchmark. The moving averages further confirm the positive momentum of RIVN.

The MACD (3-month) stands at -0.83, indicating a bearish demarcation. On the other hand, the ATR indicates high volatility as it is currently at 5.18. RIVN's stop-loss level is calculated at $22.42 with support and resistance levels found at $22.35 and $24.7 respectively.

Fundamental Analysis:

RIVN's earnings per share (EPS) is currently negative at $-6.41, leading to a negative Price-to-Earnings (PE) ratio of -3.68. This highlights the company's struggle to attain profitability.

News surrounding RIVN portrays a mixed bag of challenges and prospects. While production has been increased at a rapid rate, the company is still encumbered by significant losses. While Rivian is increasing output, profits are still expected to be a few years out. Despite the company's smaller presence in the EV market compared to Tesla, there are affirmations of Rivian's ability to grow and position itself as a worthy competitor in the burgeoning EV market.

The discounted cash flow (DCF) estimate predicates the stock price to be $36.25 – well above the current level. This is further fortified by the average analyst target price of $53.1, thus suggesting potential upside.

Curiously, there are 11 buy recommendations, three holds, but two sells, leading to an overall consensus of "Buy". However, the high-risk nature of the stock, as indicated by the news, needs to be recognized by any potential investors.

Forecast:

While positive momentum is evidenced by the stock trading above its moving averages, technical indicators suggest a possibility of price retracements in the coming trading sessions. The significant discrepancy between the DCF value, target median value, and current price indicates that fundamental analysts see substantial upside. However, the company's stretched valuation and persistent losses could be restraining factors.

For the next trading day, September 13, 2023, a slight pullback in stock price, owing to the overbought condition, may be observed. Over the upcoming week, however, the stock could possibly see an uptrend as the company's fundamentals and improving production numbers play out.

Final Evaluation:

Based on the above analysis, Rivian Automotive, Inc. (RIVN) can be categorized as a Hold. Despite its growth prospects, there are evident risks – with profitability still elusive, and the stock seemingly overbought as per technical analysis. The stock appears to bear potential for long-term growth and could be considered by risk-tolerant investors who believe in Rivian's growth story and the larger EV narrative.