Rivian Automotive (NASDAQ:RIVN) was downgraded by Piper Sandler to Neutral from Overweight, with a price target cut to $15.00 from $63.00, due to concerns over the company’s costly strategy.
The firm believes that while Rivian’s vertical integration strategy for after-sales revenue is sound, it requires a significant investment of over $4 billion to fund growth beyond 2025. Until funding is secured, the analysts predict the company will trade at book value. Despite this, analysts see a permanent shift in the auto industry towards electrification and automation, favoring cost-efficient manufacturers like Tesla and potentially Rivian.
According to the analysts, manufacturers that are both vertically integrated and cost-efficient, such as Tesla and possibly Rivian, will thrive while traditional mass-market brands suffer. In addition, these companies may also compete in the smaller, high-end segments that are typically dominated by luxury brands but have lower sales volumes.