What happened
Rivian Automotive (RIVN -3.62%) stock is losing ground again in this week's trading. The company's share price was down roughly 4.3% from last week's close ahead of Friday's market open, according to data from S&P Global Market Intelligence.
As with many other growth stocks, Rivian's valuation has recently been hit hard due to a combination of macroeconomic and geopolitical pressures. The electric vehicle (EV) company's share price also took a hit this week following downward stock-price target revisions from analysts.
Image source: Rivian.
So what
Concerns about high inflation have once again prompted big sell-offs in this week's trading. Risk factors related to Russia's invasion of Ukraine, including signs that military actions could escalate and Russia's move to cease gas deliveries to Poland and Hungary, have also created bearish catalysts.
Turning to catalysts more immediately related to Rivian's recent performance, J.P. Morgan's Ryan Brinkman published a note on Ford Motor Company stock on Monday lowering his one-year price target on Ford from $22 per share to $21 per share. The analyst cited the auto giant's substantial stake in Rivian and the EV specialist's declining valuation as part of the reason for making the move.
Barclays analyst Brian Johnson then published a note on Rivian the following day, maintaining an equal-weight rating on the company but lowering his one-year price target on the stock from $42 per share to $38 per share. Johnson increased his target for the company's expected loss per share to $1.35 from $1.13 due to indications that the company's production of vehicles was coming in significantly ahead of current demand.
Now what
Rivian has major backing from industry giants across multiple sectors, with companies including Amazon and Ford owning substantial stakes in the business. Lately, the EV specialist is making the news because big declines for its share price have led to big losses showing up in the earnings reports of the aforementioned backers. While Rivian stock is creating some near-term headwinds for companies who bet big on it when it was trading at higher valuations, it's worth noting that neither Amazon nor Ford appear to have trimmed their holdings in the company.
The EV player published an update earlier this month announcing that it had produced 2,553 vehicles in the first quarter and delivered 1,227 vehicles in the period. The company is rapidly scaling up production, but investors should keep an eye on the ratio between vehicles produced and vehicles delivered in order to get a sense for the levels of demand the business is seeing.
Rivian now has a market capitalization of roughly $29 billion and is valued at approximately 15 times this year's expected sales. That's still a highly growth-dependent valuation, and it puts the stock at risk for more pullbacks if investor appetite for risk continues to wane. With the market reacting negatively to Amazon's recent earnings report and plenty of other risk factors to consider, Rivian stock could see more bumpy trading in the near term.
