The second half of 2023 and 2024 so far have proven difficult for the electric vehicle (EV) industry. Competition has been steadily rising while demand has been dropping so much that most companies in the sector have been equally and severely hit on the business side as well as in the stock market.
The dire state of the industry is perhaps best exemplified by the fact that even Elon Musk’s Tesla (NASDAQ: TSLA) managed to sell only a single car in South Korea throughout January.
Even the unexpected February rally, spearheaded by the Lucid Group (NASDAQ: LCID) appears to have ended as the Saudi Arabia-owned luxury EV maker collapsed 16.76% in Thursday trading.
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Still, none of the major stocks in the industry fell as much on February 22 as the shares of Rivian (NASDAQ: RIVN), which ended the latest full trading session 25.60% in the red at $11.45.
The negativity, visibility already in Thursday premarket, also persisted into the extended session leading up to the market’s opening on Friday and sent the stock even further into the red.
Why did Rivian stock collapse 25%?
A large part of Rivian’s struggles can be attributed to the general state of the EV market, which has had a major impact on all major companies in the industry – American and Chinese.
The reason why RIVN stock was so heavily impacted on February 22, however, can be linked to the fact that the company issued a prediction that it will see zero growth in 2024.
Rivian’s CEO, RJ Scaringe, explained that much of his company’s struggles, the pessimistic projection, and the recent firing of 10% of the workforce falls on the head of FED’s Jerome Powell and the institution’s keeping of very high interest rates.
Rivian’s leadership, however, also offered some silver lining by stating that the current turmoil isn’t a product of demand peaking and that the industry is still in its infancy with high hopes for long-term growth.
Rivian stock price chart
Whether Rivian’s future gives room for optimism or not, its stock market performance in the last 52 weeks has been fairly weak. RIVN shares declined 37.02% in the time frame despite experiencing three significant rallies in 2023 – in July, September, and December.
This year hasn’t been much better for the firm, and it is down 45.73% since January 1, with approximately half of the drop being accounted for by the February 22 fall of 25.60% from $15.39 to $11.45.
Analysts remain bullish on RIVN stock
Despite the long decline and the sudden fall, Wall Street analysts appear overall bullish on the struggling EV maker.
Generally, RIVN is considered a moderate buy by the experts analyzed by the stock analysis platform TipRanks and boasts an average 12-month price target of $20.39 – 78.08% above the press time price.
Out of the 20 analysts taken into account, as many as 11 rate Rivian as a “buy,’ 8 are neutral on Rivian Automotive stock, and only 1 recommends investors and traders sell their shares.
At the time of publication, the highest 12-month price target for Rivian’s stock stands at $36 and was assigned by Tigress Financial, while the lowest – $11 – is only $0.45 below the current price, indicating the experts believe RIVN is close to its likely bottom.
Surprisingly, given the most recent trend, most of the most recent adjustments have also been bullish. Cantor Fitzgerald’s estimated upside of more than 100% to $23 and a reiterated buy rating from February 22 particularly stand out from the crowd.
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