Rivian stock slides on downgrade from UBS

Shares of Rivian (RIVN) are sliding as the company received a downgrade from UBS. The firm lowered the rating of the EV maker to Sell from Buy, citing the company's mixed fourth-quarter results and disappointing outlook.

Yahoo Finance Autos Reporter Pras Subramanian joins the Live show to discuss the downgrade and what it could mean for the company moving forward.

For more expert insight and the latest market action, click here to watch this full episode of Yahoo Finance Live.

Editor's note: This article was written by Nicholas Jacobino

Transcripción del vídeo

JULIE HYMAN: Shares of Rivian, they are sliding today. UBS cut its recommendation to sell from buy, double downgrade, and slashed its price target on the stock to-- from 24 to just $8.00. The concerns are over slowing demand. Yahoo Finance's Pras Subramanian has been tracking the EV sector closely. He joins us now.

We have seen the challenges at Rivian cut its production target for the full year, or it came out with a production target that was way below estimates. You get this double downgrade. It's a tough market out there right now for these guys.

PRAS SUBRAMANIAN: Yeah, I mean, they have a few problems, a few issues here. I mean, first of all, with this UBS note, I mean, the big move was yesterday. They had to cut this-- the-- they had a $24 price target.

JULIE HYMAN: Well, to be clear, they've been wrong. Right? I mean, yes.

PRAS SUBRAMANIAN: So they had to kind of catch up. And they did. But the main concerns are, like you said, production, why is it so low compared to what Walter was expecting? Well, it's maybe a demand issue. [CLEARS THROAT] Excuse me. Also, high prices are a concern. People aren't buying these $90,000 pickups. And with regards to Lucid, another company that also had a all-time low yesterday, same issue. Cars are too expensive, can't grow fast enough. And this is the big thing I heard on both conference calls is analysts asking, when will you introduce the cheaper models that are supposed to come out?

2026 is when both companies are going to have these more volume, higher volume vehicles. They couldn't say that they could bring that-- push that forward. And that was a concern. And that's a concern that SPAC has brought up, a UBS analyst. And a number of people are saying, why can't you pull forward these cheaper cars? They need to come out now. Because this is going to be a problem through 2026. I mean, the runways they have is probably through 2025. New capital rates will have to happen in the meantime. So that's the big concern.

JULIE HYMAN: Yup. Rivian's got a new truck coming out on March 7, but it's not a cheaper model.

- Yeah, if you're bullish then, Pras, what's the thesis there?

PRAS SUBRAMANIAN: I think the thesis is that with regards to Rivian, the R2 is going to be debuted on the 20-- on the 7th. Supposedly a lot of interest there for this $45,000, $50,000 SUV kind of smaller--

JULIE HYMAN: So it is a cheaper than their highest end.

PRAS SUBRAMANIAN: And look. The R1 Ravine and the Lucid Air are highly-regarded cars. These are really, really good cars. So they have good tech, good IP. The question is, can they last longer? They have big backers in Amazon for Rivian, the Saudi PIF for Lucid. The question is, are they going to step in again to get more money, or new capital raises? But the big bullish case here is, can they bridge the gap to those volume vehicles like Tesla did?

Remember, Tesla didn't make money for years. Model Y kind of cemented them as to where they are now. So that's the big-- that's the goal. And hopefully, investors can kind weigh it out and not lose their shirt.

JULIE HYMAN: Yeah, we'll see.

- All right. Thank you, Pras. Appreciate it.