Key points:
- Barclays slashes RIVN price target from $115 to $47
- How will the company’s recent pricing debacle play into Thursday’s earnings?
- Analyst Brian Johnson believes the price plan was “baked into investor expectations”
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On Thursday, Rivian (NASDAQ: RIVN) is set to announce the company’s Q1 earnings. In terms of timing, Rivian hasn’t exactly been the subject of spotless press in the last few weeks – not that new EV companies ever really are. Just last week, a public uproar followed Rivian’s ill-timed decision to hike prices; including for those who have already pre-ordered vehicles.
Inundated with widespread responses threatening cancellations, Rivian made a bold announcement to revoke the price increases for those that have already pre-ordered; simmering the public outcry in a bid to maintain a trustworthy public reputation.
Also Read: The Best Electric Car Stocks to Buy
Since the pricing debacle, analysts across the board have been cutting price targets ahead of the company’s approaching earnings. Barclays analyst Brian Johnson cut the firm’s price target to $47 from $115, maintaining an Equal Weight rating.
The price cut comes as an inevitable reaction to Rivian’s decision to bear the weight of rising costs for the sake of public relations instead of inflationary-attested price increases. Moving into earnings, it's likely we will see strong evidence of supply chain pressures that will be weighing on revenue growth. Johnson believes that the planned price increase was “baked into investor expectations”, hence the rollback throws margin estimations into questioning.
It will no doubt be a tricky earnings call for Rivian; akin to many other vehicle manufacturers that are currently struggling through bottlenecks. This, and the pricing situation may leave investors cautious on Thursday. Will recent investment from calPERS and Third Point have any effect on bearish sentiment?
