Although the markets have received Donald Trump’s election positively, an analyst is warning that the power shift might not be ideal for electric vehicle manufacturer Rivian (NASDAQ: RIVN).
Particularly, Bank of America (NYSE: BAC) has downgraded Rivian stock from ‘Buy’ to ‘Neutral’ and reduced its price target from $20 to $13, citing potential bearish sentiments from possible Trump policies on the EV space.
In an investor note on November 8, BofA analyst John Murphy stated that the decision reflects potential risks for Rivian if policy shifts occur under the new administration.
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Interestingly, Murphy highlighted that while Rivian is on track to achieve a positive gross margin by the end of the fourth quarter, regulatory credits currently support this margin.
These credits, however, could be at risk under Trump’s administration, which has previously voiced skepticism about incentives for EV manufacturers.
Murphy noted that the downgrades considered the company’s slowed growth, where he expects Rivian to have ‘moderate growth in deliveries’ in 2025.
“These credits could be at risk if policy shifts occur under the Trump administration… Additionally, we now anticipate only moderate growth in deliveries in 2025,” Murphy said.
More analysts revise RIVN stock price
The BofA downgrade adds to other recent analyst revisions that have lowered the stock target. As reported by Finbold, Truist reduced its target from $16 to $12, maintaining a ‘Hold’ rating due to persistent production setbacks and missed delivery targets.
Mizuho adjusted its target from $15 to $12, citing U.S. EV demand challenges, but expressed optimism for Rivian’s long-term prospects with the upcoming R2 platform and a recent partnership with Volkswagen.
Guggenheim also lowered its target from $21 to $18, retaining a Buy rating, but warned that supplier issues may impact Rivian’s production through Q4.
The downgrade adds to Rivian’s troubles. After recording disappointing third-quarter results, the company issued a reduced earnings forecast for the year. Revenue was $874 million, against the $990 million expected by Wall Street, and the net loss was $1.1 billion.
For the full year, Rivian forecasted earnings before interest, taxes, depreciation, and amortization at a loss of $2.83 billion to $2.88 billion.
This came when the company lowered its annual production forecast from 57,000 units to between 47,000 and 49,000 units, citing supply chain disruption.
Indeed, the EV maker has been navigating a challenging environment, facing significant competition from players like Tesla and weakened demand. Meanwhile, the company intends to capture more market share by rolling out three new models, the R2, R3, and R3X, under $50,000.
Following Trump’s election, the market is soaring, but analysts warn that his plan to scrap government rebates and tax incentives for EVs will be harmful, especially for the smaller players.
In this case, Wedbush Securities Dan Ives warned that Tesla (NASDAQ: TSLA) would likely benefit from such an environment due to its unique market dominance and CEO Elon Musk’s close ties to Trump.
RIVN stock price analysis
As of press time, RIVN was trading at $10.03, down 0.2% since the last market close. The stock has generally sustained losses throughout 2024, dropping 52% year to date.
RIVN is trading below its 50-day and 200-day simple moving average, indicating a bearish trend. Breaking through these resistance levels may be difficult without improved fundamentals by the company.
Featured image via Shutterstock
