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Rivian Automotive (RIVN) Stock Facing Downturn Amidst Volatility and Bearish Trend

StockInvest.us, 1 month ago

Rivian Automotive Technical Analysis

Rivian Automotive, Inc. (RIVN) is undergoing a sharp downturn, having closed on January 18, 2024, at $15.74, marking a 6.09% drop from the previous trading day. During the day, the stock fluctuated between $15.36 and $17.005, showing significant volatility. The current trading price is significantly below the 50-day moving average of $19.01 and the 200-day moving average of $18.73, indicating a bearish trend for the stock. The RSI (relative strength index) of 6 is well below the oversold threshold of 30, which could suggest the stock may be due for a rebound in the short term. However, significant caution is advised as the stock shows a negative MACD (moving average convergence divergence) of -0.12, reinforcing the bearish trend.

The ATR (average true range) stands at approximately $7.16, illustrative of the stock's high volatility. The immediate support level is at $15.72, with resistance encountered around the $16.76 mark. RIVN’s market cap stands at $14.92 billion, with a substantial volume of trades reaching 54.34 million on the last trading day, surpassing the average volume of 35.48 million. The high volume on a down day can be seen as a bearish indicator.

Rivian has a negative EPS (earnings per share) of -$6.02 and a negative PE (price-to-earnings) ratio of -2.61, which further trouble fundamental analysts and indicate the company is not currently profitable.

Fundamental Analysis

From a fundamental perspective, Rivian’s financials reflect the problematic nature inherent in many growth-oriented electric vehicle (EV) companies. The negative EPS of -$6.02 is concerning and demonstrative of the company’s inability to generate profits so far. The negative PE ratio further solidifies the fact that Rivian has not yet reached profitability, which is typical for startups in the EV sector focusing on growth and market penetration rather than immediate profit.

However, recent news suggests there is potential for change. The company ended 2023 on a strong note with increased EV deliveries, and it expects to achieve a positive gross margin in Q4 2024. If this materializes, it may boost investor confidence. The recent price target cut and downgrade by Deutsche Bank reflect a more cautious outlook despite the forecast for positive gross margins later in the year.

Rivian Automotive The consensus among 19 analysts indicates a "Buy" rating with a wide-ranging target price--with a high target of $147 and a low of $15. The median target price of $32.50 reflects significant upside potential from the current trading price.

The forecast from the DCF model shows a value of -$13.58, which underscores the high risk associated with Rivian’s stock based on cash flow expectations.

Stock Performance Predictions

Predicting the next trading day's performance is challenging due to the volatility and current negative sentiment surrounding the stock. However, considering the company's recent positive production news and the extremely low RSI, a short-term rebound wouldn't be out of the ordinary as some investors might see this as a buying opportunity.

For the upcoming week, the performance of RIVN will likely continue to experience high volatility, with potential for both further declines or a recovery if the market perceives news about the company’s future margins positively.

Overall Evaluation

Considering the intense downward pressure, significant losses, and present bearish trend, Rivian stock stands at a precarious position. The technical indicators are largely negative, though there are early signs that it could be oversold. Fundamentally, the company's expected future improvements in gross margins and production milestones offer some glimpse of hope.

Based on this analysis, Rivian Automotive, Inc. holds speculative potential and is classified as a "Hold" for existing investors who can tolerate risk and are long-term oriented. New investors or those with lower tolerance for risk might want to wait until more concrete signs of financial improvement manifest before committing, as the stock may still be subject to substantial short-term volatility and risk. Any investment in Rivian should be accompanied by close monitoring of the market’s reception to its upcoming earnings announcement and any developments regarding its financial health and product demand.

Check full Rivian Automotive forecast and analysis here.