0% commission for ETF tradesRivian Automotive (RIVN) Stock Evaluation: Hold Recommendation Amidst Profitability Concerns
StockInvest.us, 10 months ago
Fundamental Analysis
Rivian Automotive, Inc. (RIVN) closed at $15.72 on October 30, 2023, exhibiting a 1.81% decrease or $0.29 fall from the previous session. This change lagged the S&P 500's daily gain. The stock underperformed the market by -0.99%, according to the previous day's trading session.
The Electric Vehicle (EV) manufacturing company has a market capitalization of roughly $14.78 billion. The average trading volume for RIVN is approximately 35.59 million, but the company only managed to trade about 28.42 million shares in the last session, indicating lower liquidity than usual.
From a fundamental perspective, Rivian is yet to be profitable, with an EPS of -$6.46 and a Price to Earnings (P/E) ratio of -2.43. This may be a potential concern for investors seeking companies with a positive earnings track record. Another point of interest is the anticipated 155% year-over-year jump in revenue for the coming quarter due to an increase in EV deliveries, hinting at enhanced operational efficiency.
Technical Analysis
On the downside, Rivian stock seems to be in a bearish trend, as depicted by its 50-Day Moving Average of $20.96 and the 200-Day Moving Average of $18.22 being above its last closing price. It's also approaching its year low of $11.68, suggesting downward momentum. The stock has a high resistance level at $18.27 and currently lacks a noticeable support level, which could indicate potential instability in the price.
Additionally, the low Relative Strength Index (RSI) of 20 might be indicating an oversold condition. An oversold status can signal that it might be a good time to buy for those believing in the company's long-term prospects and assuming the stock will rebound.
The Moving Average Convergence Divergence (MACD) for RIVN is -1.87, revealing a downward trend, and the high Average True Range (ATR) of 7.72 indicates a high degree of volatility.
Recent News Impact
Concerns about demand and declining selling prices have recently impacted Rivian negatively. The company's plans to offer lower-cost vehicles from its next manufacturing plant have been met with skepticism by investors, causing the share price to drop. On a positive note, increased EV deliveries expected in the third quarter, spurred by Cantor Fitzgerald's bullish outlook for Rivian's role in the 2024 EV race, could help to balance out these setbacks.
Stock Price Prediction and Recommendation
Analysts' consensus is a "Buy" rating with 14 buys, 2 holds, and 2 sells, but the high and low target prices are drastically different, ranging between $14 and $147. The consensus price target is $53.1, and the median target is $33.
Based on the data, the bearish technical signals, fundamental concerns, along with a range of price targets present a high-risk, high-reward scenario. If the company fulfills the revenue jump due to increased delivery and manages to navigate the high-interest rate climate, the stock could potentially rebound toward the median or even consensus target price.
For the next trading day, October 31, 2023, considering the bearish signals, no support level, and recent news, the stock price might continue this downward trend. However, given the oversold condition, there also exists the potential for a rebound.
Longer term, for the upcoming week, it's recommended to hold and wait until their earnings announcement on November 7, 2023. If the reported revenues meet or exceed expectations, the stock could rebound towards its 200 Day Moving Average or potentially higher.
Final Evaluation
Considering the above analyses and a combination of both negative and positive factors, Rivian Automotive, Inc. (RIVN) is evaluated as a "Hold" at the moment. The current downward momentum and concerns around profitability weigh heavy. However, upcoming earnings and potential revenue growth, as well as the oversold condition, could turn things around for the company.
This recommendation is aligned with their forthcoming earnings report and assumes a long-term perspective reflected in the recent analyst consensus rating. This signifies that investors should hold the stock and wait for future performance indicators before making more extensive investment decisions.