One Wall Street analyst thinks Rivian Automotive (RIVN -2.19%) stock has dropped far enough. UBS analyst Joseph Spak upgraded the stock of the electric vehicle (EV) maker on Tuesday, and implied there could be another upgrade ahead.
Spak addressed both a short-term view as well as a specific catalyst that could drive Rivian shares higher over the long term. After Rivian stock has dropped by more than 50% in the last three months, Spak upgraded his rating from sell to neutral on Tuesday. He kept his price target of $9, but noted that there could be a new catalyst emerging, too.
One catalyst that could drive this EV maker's stock
In the short term, Spak noted, "We believe the near-term risk/reward is more balanced at current levels" after the recent slide in Rivian shares. He added that risks that are now reflected in the stock price include slowing EV sales growth in general. But the short interest has also reached over 18% of available Rivian shares.
Any near-term catalyst could spark a short squeeze that would push shares higher. And there is a potential catalyst ahead. Rivian recently introduced the R2 SUV, its next EV offering. The analyst believes that a positive initial update on R2 reservations would support the longer-term potential for the stock.
The R2 won't be available until 2026, but the stock could push higher on any update that has investors anticipating growing revenue in the coming years. With Rivian stock trading near its all-time lows, much of the pessimism surrounding EV demand and slowing sales may already be priced into the stock.
Investors shouldn't look at the short-term movement or whether short covering might push shares higher. But if the R2 platform, or even the future R3 crossover SUV that will follow, are a hit with EV buyers, Rivian's stock may have bottomed. Risks remain, of course, but investors who believe EV demand will be strong for the lower priced vehicles should consider buying Rivian stock now.
