With the onset of 2022 and the global issues, it brought with it, electric vehicle (EV) makers were severely punished.
Rivian (NASDAQ: RIVN), a once popular stock among analysts, has suffered large drawdowns to the tune of 69% year-to-date (YTD). Further, on July 11, the company discussed its restructuring plans, claiming that it has grown too fast and needs to cut roughly 5% of its workforce.
Moreover, Morgan Stanley (NYSE: MS) cut its coverage across the auto stocks on July 14, citing headwinds and slower-than-expected growth. Despite MS cutting their estimates by 5% to 10%, the cuts are generally smaller than in previous recessionary scenarios.
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Meanwhile, Rivian’s models, especially the R1S SUV is expected to be a popular choice among EV SUV drivers. In combination with the company’s contract with Amazon (NASDAQ: AMZN) for truck deliveries, the momentum may swing in their favor, once supply chain issues are behind them.
RIVN chart and analysis
Over the last month, RIVN is up 8.7%, currently showing a bull flag pattern, which occurs when prices pull back slightly after a strong rise up. The long-term trend is still negative, but the short-term trend is positive, with investors possibly keeping a closer watch on the stock.
For now, the support line is at $27.01, while resistance resides in the zone between $31.77 and $32.35.
Analysts rate the shares a moderate buy, predicting that the average price the stock could reach in the next 12 months is $50.87, 60.98% higher than the current trading price of $31.60.
Recovery of auto stocks may, in fact, be protracted if the supply chain issues continue pressuring all aspects of the economy.
Furthermore, rising interest rates and a possible recession could further exacerbate the issues the auto industry is facing, so investors may expect more volatility in the near term.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
