Rivian: A Roaring Rise Or Time To Cash Out?

Key Points

• Rivian stock has surged nearly 87% in the last month and 106% in the previous three months.
• Analysts maintain a Moderate Buy rating with a consensus price target of $27.11, implying a 7.63% upside for RIVN shares.
• Rising short interest may impact the stock's future momentum, making critical support and resistance levels essential to watch.

Since breaking out over critical resistance at $16, shares of Rivian Automotive NASDAQ: RIVN haven’t looked back. The stock is up almost 87% in the last month and 106% over the previous three months. Initially fueled by production and delivery figures that crushed estimates, the move has been sustained by increasing short interest, analyst upgrades, and favorable price action for the bulls. However, with shares up triple digits over the last three months, is it time to think about cashing in, or might RIVN have another leg up its sleeve?

Rivian Automotive is a leading EV manufacturer specializing in pickup trucks and SUVs. They prioritize environmental sustainability and aim to achieve carbon neutrality earlier than the Paris Climate Accord timeline. Rivian offers R1T and R1S models, five-passenger pickup trucks, and SUVs. Founded in 2009, the company is headquartered in San Jose, California.

Is There Still Positive Momentum?

Analysts remain bullish on the stock with a consensus rating of Moderate Buy based on sixteen analyst ratings. Ten of the sixteen analysts have RIVN as a Buy, one as a Sell, and five at Hold. The consensus price target is $27.11, predicting a 7.63% upside for shares of RIVN. Most recently, Mizuho, on July 19, boosted their price target from $27 to $30, predicting a 21.5% upside on the report date. Barclays also raised their price target from $22 to $30 earlier in the month. 

The rising short interest also plays an essential role in RIVN’s ability to trade higher. As of June 30, the short percentage of the float was 13.48%, up from 13.14% as of June 15. Based on that figure, 87.9 million shares of RIVN are sold short, equalling $1.46 billion in dollar volume. As the short interest continues to increase steadily, short sellers might begin to doubt their positions and start to cover. 

Is The Positive Momentum Enough To Push RIVN Higher?

Last week, RIVN closed the week in positive territory, up close to 7%, while the SPDR S&P 500 ETF NYSE: SPY managed to finish the week slightly positive, up 0.67%. The relative strength displayed by RIVN is impressive. Will the relative strength and momentum continue?

After clearing significant resistance at $16, RIVN quickly traded above another critical resistance level, $22. Since breaking above $22, RIVN has traded sideways, successfully digesting the recent surge higher and price action.

The consolidation over the past several weeks has created new critical levels of support and resistance that could dictate the trend and momentum of the stock once one of the levels is broken. For example, $24 has emerged as a critical level of support in the short term.

If RIVN breaks below and holds below $24, it might signal a shift in momentum, and further downside could be on the cards as investors look to take profits and short sellers gain confidence. On the flip side, if the stock can break above and hold above $27, short sellers might begin to cover, and momentum traders might go long the stock for another leg higher, resulting in a significant buy imbalance for the stock.