Rivian Automotive (RIVN 6.10%) stock slumped Tuesday morning and was down by 7.6% as of 11 a.m. ET. Just as the electric vehicle (EV) maker is trying to turn things around and scale up production and sales, leading automakers are warning about a visible slowdown in the global EV market. At least one analyst believes Rivian could have a particularly trying time and may miss a crucial financial goal this year.
Inflation and slow demand is terrible news for Rivian
Barclays analyst Dan Levy slashed his price target on Rivian stock from $25 per share to $16 a share on Monday based on weakening EV demand. Levy believes Rivian will not be able to escape the pressure on the broader EV market, and that could hurt not only its sales volumes, but also its pricing power. In his view, the odds are that Rivian will miss its goal of hitting a positive gross margin by the end of 2024.
Rivian shares slipped on Monday, but extended their losses Tuesday morning as January's inflation figures came in higher than expected at 3.1% year over year and 0.3% month over month. Inflation and higher interest rates are significant headwinds to the automotive industry as cars and loans become costlier, forcing many would-be customers to delay or cancel purchases. And if the Federal Reserve sees the need to keep up its battle against inflation, it may not cut interest rates as quickly or as far as some had hoped this year.
Should you buy or sell Rivian stock now?
The first few weeks of 2024 have been painful for Rivian shareholders -- the EV stock has lost nearly 35% of its value year to date. The stock's rebound in late 2023 rested primarily on hopes of higher deliveries and better margins in 2024. Those goals seem to be big challenges for Rivian for now -- its fourth-quarter deliveries slipped 10% sequentially.
With inflation refusing to go away and the near-term outlook for the EV market looking bleak, Rivian stock could remain under pressure. If you're keen to buy the stock on dips, you might want to wait until Feb. 21, when Rivian will report its fourth-quarter numbers and provide some guidance for 2024.
