Sign InSummary
Technical indicators suggest a bullish trend for Rivian Automotive, Inc. (RIVN) with a significant increase in stock price, but an overbought condition indicated by the Relative Strength Index (RSI) may lead to a potential pullback; however, positive news and the possibility of consolidation or further upward trend are expected in the short-term and upcoming week, warranting a 'Hold' rating for current investors and caution for potential entry points. (Analysis date: December 14, 2023)
Technical Analysis
The technical indicators for Rivian Automotive, Inc. (RIVN) show a bullish trend with a last close of $22.43 on December 14, 2023. This represents a significant change of $2.75 or a 13.97% increase from the previous close. The stock's price fluctuated between a low of $20.30 and a high of $22.53 during the day, with a 50-day moving average of $17.63 and a slightly higher 200-day moving average of $17.96, indicating a positive crossover and a potential uptrend in the making.
RIVN's Relative Strength Index (RSI) stands at 79, suggesting that the stock may be overbought at this level and a pullback could be imminent. The Moving Average Convergence Divergence (MACD) shows a value of 0.53, further supporting the current upward momentum. The Average True Range (ATR) indicates high volatility with a value of approximately 5.47. RIVN's shares are currently trading above the major support level of $18.92, with a next resistance point at $23.66. However, with a high RSI, investors may watch for a retraction towards the support levels.
Fundamental Analysis
Rivian has a market capitalization of about $21.26 billion and an extensive trading volume of roughly 82.56 million shares, which is significantly higher than the average volume of 39.86 million shares. This indicates heightened investor interest. The higher-than-average volume, combined with the significant price move, suggests strong buying pressure.
However, Rivian's financials show an earnings per share (EPS) of -$6.02 and a negative price-to-earnings (PE) ratio of -3.73, highlighting the company's current lack of profitability. With a sizeable number of outstanding shares at 948 million, Rivian's financial health is crucial for future valuation.
The recent news impacting Rivian's stock includes a partnership with AT&T to supply electric vehicles, which likely contributed to the price surge. This positive news follows the termination of an exclusivity deal with Amazon, freeing Rivian to explore other partnerships and market opportunities. Conversely, the bearish case presented suggests Rivian could face difficulties selling vehicles and achieving profitability amidst a highly competitive electric vehicle (EV) market.
Short-term Outlook
For the next trading day, December 15, 2023, investors should watch for potential profit-taking after the recent stock surge, due to the high RSI indicating overbought conditions. As a result, the stock price may stabilize or retract slightly. However, the bullish sentiment from recent news about the AT&T deal could sustain interest and limit any pullback.
Upcoming Week Outlook
Looking forward to the upcoming week, the stock may experience high volatility and potential price swings. Depending on the broader market sentiment and the EV industry's performance, RIVN could either consolidate at current levels or continue to trend upwards towards resistance levels if the positive sentiment remains and no negative industry news surfaces.
Overall Evaluation
Given Rivian's recent surge in stock price, positive news flow, and a consensus recommendation of "Buy" from the majority of analysts with a target consensus of $53.15, the stock can be categorized as a 'Hold' for investors currently owning the stock. New investors may want to wait for a potential pullback or stabilization due to the overbought technical conditions suggested by the RSI before considering an entry point. Existing investors could consider holding their position to see if Rivian's partnerships and market strategy can deliver stronger fundamentals and help the company transition to profitability.
For those considering selling, the stock's current momentum and future prospects could justify maintaining the position unless a significant deterioration in fundamental or industry prospects occurs. The recommendation for Rivian's stock is a cautious 'Hold' with a close watch on market trends, news developments, and company performance metrics. A reassessment after the next earnings announcement on February 26, 2024, could be advisable to evaluate the impact of recent developments on Rivian's financials.
