Rivian Automotive Stock Shows Potential for Upward Price Correction

Fundamental Analysis

Rivian Automotive, Inc., an NASDAQ listed automaker with the ticker symbol RIVN, reported a last close price of $22.35 on August 09, 2023, indicating a sharp drop of $2.45 (-9.88%) from the previous trading session. With a market cap of $20.82 billion, Rivian is steadily positioning itself among the robust players within the automotive sector.

The automaker's financial fundamentals, however, paint a steeply valued picture. The company reports an EPS of -7.1 which together with a negative PE ratio of -3.15 suggest the company is not making profits currently. While profitability remains elusive as of the moment, recent news highlights that Rivian has been able to reduce per-unit losses, continuously moving towards profitability with a projection to reach it by the end of 2024.

Focusing on the earnings announcement on August 08, 2023, some news emphasized the positive aspects despite the stock's tumble. Notably, Rivian's shares plunged nearly 10% on the announcement day. The optimistic side of this perspective goes back to the belief in the analysts at Wedbush, who anticipate 'sunny days ahead' for Rivian after its 2Q results, and reiterating an Outperform rating, raised the stock’s price target to $32 from $30.

Furthermore, aligning with the Discounted Cash Flow (DCF) measure which places Rivian's stock value at $35.02, higher than the current price level, taking into account analyst's consensus target of $54.05, with a target high of $147 and a target low of $14, there's room for optimism.

Technical Analysis

Rivian held an RSI14 level of 37, tipping towards the oversold limit, which can often indicate a potential upward correction in the near future, depending on market condition. Additionally, the 50-day moving average priced at $20.03 and the 200-day moving average at $19.96, both indicate that current levels position Rivian's stock at a higher threshold compared to historical averages.

The volume of traded shares for the day was 83.74 million, substantially higher than the average volume of 49.92 million. High trading volumes are often associated with price movements, suggesting considerable activity around the stock.

MACD (3-month) stood at 2.16, suggesting a positive trend in terms of both momentum and trend. The ATR at 8.32 suggests high price volatility, which means prices can change drastically in a short amount of time, reflecting higher potential for gain but also for loss.

The stock has a significant support at $21.62, close to its price low of $22.26 for the day, while resistance sits at $24.7, near the price high of $25.73. These crucial breakpoints will play a vital role in upcoming trading sessions.

Prediction

The fundamental and technical analyses point to a potential upward price correction for the next trading day, August 10, 2023. For the upcoming week, the stock could follow the same trajectory due to the oversold condition and recent positive announcements, conditions permitting.

Final Evaluation

Taking all into account, considering Rivian's positive advancements towards profitability, combined with the discounted cash flow valuation, and the heightened trading activity, Rivian's stock appears to hold a strong growth perspective for the near term. Accordingly, a 'Buy' recommendation is suggested. However, the high price volatility and ongoing losses mean the stock carries a high level of risk, and investors must exercise caution.