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Rivian Stock Can Rally, Says Analyst. Look Out, Short Sellers.

https://www.msn.com/en-us/money/savingandinvesting/rivian-stock-can-rally-says-analyst-look-out-short-sellers/ar-BB1lHZkA

Rivian Automotive caught an upgrade on Tuesday. Shares have fallen far enough for one analyst, who adds that bearish investors should watch out for high short interest in Rivian stock.

Tuesday, UBS analyst Joe Spak upgraded Rivian stock to Hold from Sell. He left his price target unchanged at $9. He didn’t have to change his price target because Rivian shares have cratered about 64% year to date heading into Tuesday trading. (LOLOLOL)

“With climbing short interest, [investor] positioning is also a higher risk, especially if a positive data point [or] catalyst emerges,” wrote Spak. “Near-term upside catalysts could be if there is a positive update on R2 orders which would reinforce what Rivian can become, even if that growth is more likely in 2026 [or] 2027.”

Short sellers borrow stock they don’t own and sell it, betting that they can replace the borrowed shares later at a lower price.

Rivian’s short interest—the number of shares borrowed and sold short compared with the shares available for trading—is about 18%, up from about 12% a year ago, according to FactSet. The average short interest for a stock in the S&P 500 is closer to 2%.

Sometimes short sellers can get themselves into trouble when too many have the same idea. High short interest can lead to a squeeze when a stock price rises rapidly as short sellers look to buy shares all at once.

As for the potential catalyst, the R2 platform is Rivian’s lower-priced second-generation platform that should be on the road by 2026. It follows the R1 platform on which Rivian builds the R1S SUV and the R1T pickup truck. Rivian unveiled the R2 platform in March.

The upgrade was helping a little. Shares were up 1.3% in early trading, while the S&P 500 was down 0.1% and the Nasdaq Composite was up 0.1%.

Overall, 50% of the analysts covering Rivian stock have Buy ratings, according to FactSet. The average Buy-rating ratio for stocks in the S&P 500 is about 55%. An upgrade to Hold doesn’t change the Buy-rating ratio. It changes the Sell-rating ratio, though. Now 11% of analysts covering the stock have Sell ratings. The average Sell rating ratio for stocks in the S&P 500 is about 7%.

The average analyst price target for Rivian shares is about $16.50. It’s been falling along with the stock. A year ago, the average analyst price target was almost $26.

Coming into Tuesday’s trading, Rivian stock was off about 39% over the past 12 months.