Through yesterday's trading session, investors who have hitched a ride with Rivian Automotive (RIVN -0.78%) have endured a rocky road, with the stock falling 22% in April. The road isn't any smoother today for investors in the electric vehicle (EV) manufacturer; an analyst's bearish take on the stock is contributing to its downward movement.
As of 10:49 a.m. ET, Rivian's stock is down 3.6%, recovering slightly from its earlier slide of 6.3%.
Although the buy rating remains unchanged, Vijay Rakesh, an analyst at Mizuho, has reduced the price target to $90 from $95. According to Thefly.com, Rakesh predicates the lower price target on the belief that the company is "growing through a grueling learning phase reflective of EV start-ups."
Rakesh's price target revision isn't drastic, but it's the second pessimistic take on the stock this week. On Monday, an analyst at Piper Sandler, Alexander Potter, slashed his price target to $112 from $130.
But it's not merely the lower price targets that are likely motivating investors to exit their positions -- it's also commentary from the company's C-suite. Earlier this week, Rivian's CEO, RJ Scaringe, discussed how the industry is poised to suffer from a battery supply shortage. Investors had high hopes that Rivian would be able to charge ahead with ramping up production, but an inability to source batteries for its vehicles could be disastrous.
Savvy investors know that Wall Street's time horizons and the related price targets often belie the promise of long-term holding periods. Therefore, it's always prudent to take analysts' price targets with a grain or two of salt. However, the red flag Scaringe has raised regarding the battery supply is a material issue that could adversely affect the company's growth prospects, and it's something investors should certainly follow closely.