Sign InRivian Automotive Surges 2.92% As Overbought Indicators Suggest Potential Reversal
Summary
Rivian Automotive, Inc. (RIVN) closed at $24.69 on July 18, 2023, with a 2.92% increase from the previous session, but with an overbought RSI level and negative financial performance, it may be advisable to Hold the stock and monitor the highly competitive EV market before making any decisive actions.
Technical Analysis
Rivian Automotive, Inc. (RIVN) closed at $24.69 on July 18, 2023, reflecting a 2.92% increase from the previous session. This performance was noticeably higher than the day's low of $23.74 and lower than the day's high of $25.83. The company has recently seen a substantial increase in its trading volume, recording 65.99 million shares - significantly above its average volume of 41.62 million shares.
On the technical side, Rivian's RSI 14 is at an extremely overbought level of 84. It's necessary to note that an RSI level above 70 indicates potential overbought conditions, suggesting that a correction or even a sharp reversal could be imminent.
The company's 50-day moving average stands at $16.15, while the 200-day moving average is $20.52. The MACD value, a trend-following momentum indicator, for the last three months is 2.82, suggesting bullish sentiment in the market.
Fundamental Analysis
Rivian has a significantly high market capitalization of $22.99 billion illustrating its market standing among competitors. Nevertheless, it's important to consider the company's financial performance. Presently, it has a negative EPS of -6.79 and a negative PE ratio of -3.64, implying that the company is not profitable.
Rivian has close to 931.51 million shares outstanding in the market, which is an essential factor in considering its current market capitalization. The future incentive for the company is an upcoming earnings announcement scheduled for August 8, 2023.
Discounted cash flow (DCF), a valuation measure, stands at $37.36 per share, which is remarkably higher than the current market price, indicating that the stock may be undervalued.
In terms of price performance, Rivian's year low stands at $11.68, while the year high is $40.86. These figures provide potential investors with understanding about the price volatility and the stock’s performance over the past year.
News Impact and Future Predictions
Recent news cited a favorable court ruling regarding Rivian's upcoming manufacturing facility in Georgia. Expected to produce 400,000 vehicles annually, this new facility may be a potential growth driver for the company. However, increasing competition in electric vehicle (EV) production, as indicated by recent developments from Ford (F) and Tesla (TSLA), may challenge the company's progress.
Referring to analysts' consensus, the target high price for RIVN is $147, which is drastically higher than the current price, while the lowest target price is $14. The median target price is $35 and the consensus target price is $53.95. The wide range of target prices implies a high level of uncertainty concerning the company's future performance.
Conclusion - Stock Recommendation
Taking into account the overbought technical indicators, unfavorable PE and EPS numbers, and growing competition in the EV space, Rivian could be seen as a stock to "Hold" for now. While Rivian has potential growth drivers, such as the new facility, future stock performance is unpredictable due to the highly competitive EV market. The company's current market price is considerably lower than the DCF value, suggesting the stock is undervalued. However, investors should consider these factors and the uncertainty range of price targets before making any decisive actions. As such, a more prudent approach would be to closely monitor the company and the overall EV market trends.
