Shares of electric vehicle manufacturer Rivian (NASDAQ: RIVN) slumped by 7.3% in the afternoon trading session after Bank of America analysts downgraded the stock’s rating from Hold to Sell and slashed the target price from $13 to $10. This new price target suggests a potential 17% downside from where shares were trading before the downgrade announcement. Analysts added, We downgrade RIVN from Neutral to Underperform.

We downgrade RIVN from Neutral to Underperform. RIVN remains one of the most viable among the startup EV OEMs [original equipment manufacturers] and is making progress towards sustainably positive gross margins.

The share closed the day at $11.97, down 7.5% from the previous close. Rivian is facing substantial headwinds in the current market conditions. The electric vehicle industry in the US has seen increased competition, including entrants like Tesla, Ford, and General Motors, all of which are expanding their electric vehicle offerings.

The stock’s volatility highlights the market’s reaction to news. 8.3% of the last moves have all been over 5% indicating that the market feels the stock has been hit by significant news but it may not be enough to fundamentally change the perceptions of the company.

This latest move comes just three days after the stock dropped 4.8% on the news that Cantor Fitzgerald analysts downgraded the stock’s rating from Buy to Neutral following its Q4 2024 earnings report. The analysts highlighted key concerns, including lower vehicle deliveries, fewer EDV[electric delivery van] deliveries, and worsening macro conditions, including the implementation of incremental tariffs and the likely removal of the $7,500 EV Tax Credit.

lower vehicle deliveries, fewer EDV [electric delivery van] deliveries, and worsening macro conditions, including the implementation of incremental tariffs and the likely removal of the $7,500 EV Tax Credit.
Cantor Fitzgerald analysts

While Rivian’s Q4 2024 report had some positives, the overall outlook wasn’t entirely rosy. That quarter alone, its full-year EBITDA guidance missed analyst expectations, as well sales forecast for 2025 fell short of analysts’ estimates Additionally, The company was unable to re-establish steady gross margins which were previously negative, which to a large part forced the restructuring deal with Volkswagen in November, 2024. which saw Volkswagen priced in with a ~$5.8 billion deal to support funding and maintaining positive cash flows for Rivian.

Furthermore, despite the mixed results, Rivian incentivized by its positive gross margins and profitability put it in a unique position compared to its peers.

The company’s year-to-date performance reflects broader market sentiments and specific sector challenges. Rivian is now trading at $11.90, out paced by 10.2% since the beginning of 2024 shares are currently trading 34.3% below its 52-week high of $18.11 from July 2024. Those buying Rivian at the IPO in 2021, who invested in $1000 would now be looking at $118.14.