Why Rivian Stock Rebounded on Tuesday

investor rivian cars (RIVN 3.82%) I got some rare good news on Tuesday. The electric vehicle market, which showed a decline for four days in a row, including a sharp decline in yesterday’s news, has become so bad. tesla (TSLA -2.89%) You have to lay off 10% of your employees. Shares of Rivian had surged 4.3% as of noon ET today.

One bank says Rivian is no longer for sale.

investment bank until yesterday UBS Rivian stock was pegged with a sell rating and $9 price target. Today, I think UBS is still worth just $9 per share. This is a far cry from the stock price of more than $130 at the time of the initial public offering. But the bank no longer thinks it’s a sell.

Last night, UBS upgraded Rivian to Neutral as the stock approached its target price. “The stock price now better takes into account our medium-term concerns,” the bank said.

UBS now believes $9 is the right price if Rivian generates just $4.5 billion in sales next year. If the electric vehicle (EV) company’s sales can reach $5.1 billion (as the bank predicts), its stock price may actually rise. And the money it gets from pre-orders for its upcoming R2 electric SUV could help make that happen.

Perhaps of greater concern to investors, UBS said short interest in Rivian stock has increased to 18.7%, making it increasingly risky to short it (or maintain a sell rating). If the EV maker posts good news in its next earnings report or promises good news in its guidance, traders may decide to cover their shorts and buy back Rivian stock, pushing the price even higher.

In short, what UBS is really worried about here is the short squeeze. In the long run, it’s still probably not a good idea to invest in money-losing EV companies like Rivian. But in the short term, cutting it short may be a much worse idea.