Rivian Automotive Inc's (NASDAQ:RIVN) growth and demand story looks solid heading into the fourth quarter, according to analysts at Wedbush, as they repeat an ‘outperform’ rating for the Amazon-backed EV truck maker.
At the same time, however, Wedbush noted the frustration amongst investors over some perceived self-inflicted problems at Rivian.
With a price target pitched at $25.00, the California-based stockbroker sees nearly 40% upside to the current Rivian price of $17.89, albeit the broker has just cut back this target from $32.00.
A “surprising” convertible debt issue, announced last week after otherwise positive production and delivery numbers, was one such example, said Wedbush analyst Daniel Ives, who called the fundraise “another gut punch to investors”.
“While we fully get the capital needs down the road for Rivian as it ramps production/deliveries over the coming years the Street's low confidence in this management team around investor messaging and execution is a major problem for the stock and remains a huge overhang,” Ives said in a note.
“One step forward, two steps back is the theme for Rivian the last few years and the company has turned the corner from a production perspective and navigated many challenges YET continues to stumble with head-scratching strategic/investment moves again and again with this latest convert move along those lines.”
Ives reckons Rivian has a solid path to become one of the long-term winners in the sector, but added that confidence in the story has taken a clear hit.
“Patience is wearing thin across the Street as Rivian heads into its next stage of growth and production expansion as surprises out of left field is a building headache for investors,” Ives said.
He added: “While we maintain our ‘Outperform’ rating and remain positive on the name, one more big misstep like this convert offering would be the final straw that broke the camel's back for many bulls including ourselves.
“We are lowering our price target from $32 to $25 reflecting a lower multiple as the risk profile for Rivian has been elevated in our view with a key ‘prove me’ period ahead.”