Sign InRivian Automotive's Stock Shows Potential Amid Uncertainty, Analysts Suggest Hold
Summary
Rivian Automotive, Inc. (RIVN) has potential for a slight upward trajectory in the upcoming week based on technical indicators, fundamental analysis, and recent news, although there is a high level of uncertainty and the stock is recommended as a hold until the earnings announcement on August 8, 2023. (August 4, 2023)
Introduction
Rivian Automotive, Inc. (RIVN), listed on the NASDAQ exchange, specializes in the electric vehicle (EV) market. The analysis to follow will scrutinize its fundamental and technical aspects, using information including recent news about the company.
Technical Analysis
Starting with the technicals, RIVN closed at $25.26 on August 4, 2023, essentially falling by 4.68%, or by $1.24. The trading day saw the stock's price reach a low of $25.18 and a high of $26.82. The volume for the day was 33.35 million, a decrease in contrast with the average volume of 49.04 million.
In terms of momentum, the relative strength index (RSI14) stands at 56, suggesting that it is neither overbought nor oversold. The Moving Average Convergence Divergence (MACD 3-month), a trend-following momentum indicator, is 3.23, potentially indicating a bullish trend.
The stock has been trading above both the 50-day ($19.41) and 200-day ($20.06) moving averages, affirming its bullish momentum.
Fundamental Analysis
On the fundamentals side, RIVN has a market cap of $23.53 billion and an outstanding share count of 931.51 million. However, the company is currently operating at a loss, with an Earnings Per Share (EPS) of -7.1, resulting in a negative Price to Earnings (PE) ratio of -3.56.
The Discounted Cash Flow (DCF) is evaluated at $37.93, which is significantly higher than the current stock price, implying that the stock may be undervalued.
The consensus target price stands at $53.95, with high and low targets of $147 and $14 respectively. This wide range indicates a high level of uncertainty among analysts regarding RIVN's future performance.
News Impact and Future Expectations
Interpreting recent news, RIVN appears to be at a tipping point. Some reports suggest that its stock ran fast in June and July, opening up a potential buy-in opportunity. However, Rivian may face a significant threat as it attempts to avoid joining the EV price war. Especially with Ford's decision to cut prices on the F-150 Lightning and accelerate production. Several articles point to red flags for Rivian's future, including a recent downgrade by Cantor Fitzgerald.
Prediction
Considering the technical and fundamental parameters, and incorporating the news context, the stock is expected to trade in a range on the next trading day, August 07, 2023. Based on the 50-day moving average, along with the DCF analysis, a slight upward trajectory is expected over the upcoming week.
Evaluation
Despite some negative news and a negative EPS, Rivian's stock shows potential as indicated by the DCF and the bullish technical indicators. This has analysts holding a wide range of target prices and signals a heightened level of uncertainty. That being said, the stock may be considered a Hold until the company's earnings announcement on August 8, 2023, which will offer more insight into its recent performance and future outlook.
