Rivian stock is headed for another 20% decline, according to one Wall Street analyst.

rivian cars (RIVN 6.26%) In fact, Rivian told investors in its most recent fourth quarter and annual report that it doesn’t expect any growth at all in 2024. .

Whereby UBS Analyst Joseph Spak doubled down the stock from buy to sell on Friday. Spak also lowered the company’s stock price target from $24 to $8 per share, a Wall Street low. This represents a 66% decline in the target price and a more than 20% decline from Friday’s close. And that was after stock prices had already plummeted on the news.

The rocky road to profitability

Rivian said it expects production in 2024 to plateau at 2023 levels. This led investors to sell stocks in large quantities.

Fears of declining demand for expensive electric trucks appeared to be backed by the company itself. “Our key focus is growing demand to meet our 2024 delivery targets,” Rivian CEO RJ Scaringe said on a conference call for investors.

Rivian clearly has a tougher path to profitability in a weak demand environment.

Is it a great purchase or a value trap?

UBS analysts remain positive about Rivian’s products and brands. But with no growth in 2024 and continued cash burn, Rivian will now likely need to raise new capital at some point.

Rivian’s next-generation R2 platform is expected to add low-cost vehicles to the lineup. But the R2 won’t be released until 2026, and Rivian will need a lot of cash to build a new factory and continue to sell the vehicles at a loss. Rivian ended 2023 with just over $9.3 billion in cash and equivalents. However, there is no chance that this will succeed in launching the R2 platform.

The new capital raising is likely to push the stock price even lower. This makes UBS’s goal a reasonable outcome, unless something unexpected happens, such as a partnership with another automaker. Rivian could still be a winning stock, but the stock could continue to fall from here first.