Investors in electric-truck start-up
stock to $100 from $150.
Rivian (ticker: RIVIN) stock dived 7.9% in midday trading Friday to just under $47. The
Dow Jones Industrial Average
were down 1.1% and 0.7%, respectively.
With Friday’s drop, Rivian stock is on pace to close down for the fourth consecutive day. Shares are down 26% for the week. And at about $47 a share, Rivian stock has fallen roughly $31 from its $78 November IPO price.
Problems started on Tuesday when the company announced it would raise prices for some of its vehicles by up to 20% to help offset inflation. The price increases even applied to existing reservations.
The backlash caused the company to reverse course on Thursday, and Rivian said it would honor prices at the time of reservation. Now the price increase only applies to vehicle orders after March 1. That might have irked some customers, but it also means that profit margins on early vehicle shipments won’t be as good as the company hoped for.
Now Friday brings the analyst target price cut. Gianarkias isn’t abandoning the stock, still rating shares Buy.
“Despite this [pricing] misstep and some supply chain challenges post IPO, we have full confidence that Rivian has gathered one of the best management teams and top industry talent to fully capitalize on mobility’s EV revolution,” wrote the analyst in his Friday report.
He did increase his loss estimates for 2022 and 2023 to account for inflationary pressures, however. Gianarkias now expects Rivian to lose $5.75 a share in 2022 and $6.31 a share in 2023. Prior estimates were losses of $5.51 and $5.41, respectively.
The estimate cut—along with a higher discount rate Gianarkias is applying to future earnings—account for his $50 price target cut.
This isn’t the first analyst price cut Rivian investors have had to digest. The average analyst price target has come down to $121 a share from $133 a share over the past month. The stock remains popular on Wall Street, however. About 69% of analysts covering the stock rate shares Buy. The average Buy-rating ratio for stocks in the S&P 500 is about 58%.
Write to Al Root at firstname.lastname@example.org