On Friday, Truist Securities revised its stance on Rivian (NASDAQ:RIVN) Automotive Inc (NASDAQ:RIVN), downgrading the stock from a Buy to a Hold rating. The firm also significantly reduced its price target from $26.00 to $11.00. The adjustment comes as Truist Securities shifts its focus to Rivian's future, particularly in light of the upcoming first shipments of the R2 model slated for 2026.
The analyst acknowledged Rivian's strong execution and the potential value of its vertically-integrated business model and unique brand. However, concerns were raised regarding the immediate capital needs of the company, which are expected to limit stock growth as Rivian approaches an extended period of plant shutdowns. This is predicted to result in year-over-year volumes remaining flat.
Truist Securities indicated that for investor sentiment to turn positive on Rivian shares again, there would need to be tangible signs of gross margin improvement and robust initial orders for the R2 model. The expectation is that these factors would be necessary to reignite optimism in the stock.
The decision to downgrade Rivian and reduce the price target was also influenced by a reassessment of forecasts, considering the company's near-term challenges and the broader market outlook for Rivian as it prepares for its next major product launch.
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