'One Step Forward, Two Steps Back': Wedbush Lowers Rivian Estimates On Management Missteps

The demand story for Rivian Automotive Inc RIVN remains robust, but Wedbush is worried that management missteps could continue to cast shadows of doubt on the stock.

What Happened: Wedbush analyst Dan Ives maintained Rivian with an Outperform rating and lowered the price target from $32 to $25, citing management concerns following last week's $1.5 billion convertible debt offering. 

Rivian on Thursday announced a $1.5 billion green convertible senior notes offering, which sparked a massive selloff in shares. Ives questioned the timing of the announcement and called it a "gut punch" for investors in a new note to clients on Monday. 

"While we fully get the capital needs down the road for Rivian as it ramps production/deliveries over the coming years, the Street's low confidence in this management team around investor messaging and execution is a major problem for the stock and remains a huge overhang," Ives said in the note. 

"One step forward, two steps back is the theme for Rivian the last few years."

The offering came just a day after Rivian reported strong production numbers for the third quarter. The Wedbush analyst called the timing of the move "head scratching."

Related Link: Rivian Closing The Gap With Tesla In Premium EV Market: What Data Reveals

The analyst firm still expects Rivian to emerge as one of the long-term winners in the EV space, but noted that its confidence in management's ability to navigate public markets has taken a "clear hit."

"Patience is wearing thin across the Street as Rivian heads into its next stage of growth and production expansion as surprises out of left field is a building headache for investors," Ives said. 

Wedbush maintained its Outperform rating on the EV stock, but the analyst noted that one more misstep from management will likely be the straw that breaks the camel's back for most investors, including Wedbush. 

The firm lowered its price target to reflect a lower multiple due to elevated risk concerns. Rivian is now entering a prove-it period as it continues to target full-year production of 52,000 vehicles. 

Rivian will report third-quarter numbers after the market close on Nov. 7. 

RIVN Price Action: Rivian shares were down 2.48% to $18.45 at the time of publication Monday, according to Benzinga Pro.

Photo: courtesy of Rivian.