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Barclays downgraded Rivian Automotive (RIVN) from Overweight to Equal-Weight in a note on Monday, with the stock price target also lowered to $16 per share.

Analysts based their decision on three factors. The first is that while Rivian has a great product, its technology is not enough to avoid increased signs of demand pressure amid a broader EV slowdown. Secondly, the bank believes that demand softness implies risk from pricing and slower volume growth.

Despite signs of demand weakness emerging last year in EDV and R1T, analysts hoped that demand would remain resilient for R1S. However, recent data points from the sales of R1S inventory units and the accelerated launch of a Standard range version suggest softened demand.

Barclays also sees an ongoing need for capital raises at Rivian, with the consequences of weak demand being significant. Not only does it mean the volume outlook is challenged, but it also presents a potential pricing risk, with both points reinforcing RIVN’s likelihood of missing its 2024 target of reaching gross margin profitability.

Furthermore, with ongoing capital needs given preparation for the high volume R2 in 2026, Barclays sees future pressure on the company’s operations.

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