One of the standouts of today's evening trading session was Rivian Automotive, which logged a 4.2% performance and outperformed the S&P 500 by 3.0%. The Auto Manufacturers stock is now trading at $23.8 per share and may still have upside potential because it is still -9.92% under its average target price of $26.42. Analysts have set target prices ranging from $15.0 to $40.0 dollars per share, and have given the stock an average rating of buy.
The market, on the other hand, is a bit more pessimistic. Rivian Automotive's short interest -- meaning the percentage of its share float that is being shorted on an expectation of a price decline -- is quite high at 18.5%. The float includes only shares that are available for public trading, and excludes preferred shares.
When a stock is sold short, it means an investor has borrowed shares of the stock from their broker, and then sold them at the going market price. The investor hopes for the price to decline, so that they might buy those shares back at a lower price in the future. Once they do, they can return the borrowed shares to their broker, and keep the profit they made on the transaction.
We can make inferences about the market sentiment surrounding Rivian Automotive by analyzing its rate of institutional ownership. If institutions such as hedge funds and pension funds are the primary shareholders of a corporation, it most likely means that its shares are a good investment according to those institutions' analysts.
At 48.0%, the rate of institutional ownership is average, indicating that a sufficient number of institutions have concluded that it is a stable investment. Beware, however, that the rate of institutional ownership could also indicate an ongoing proxy battle or takeover attempt -- so you should also periodically check the news about a stock whose institutional ownership you are tracking.
In conclusion, we see mixed market sentiment regarding Rivian Automotive because of an analyst consensus of some upside potential, a buy rating, an unusually large proportion of its shares sold short, and only a small number of institutional investors. At Market Inference, we believe that any investment decision should be preceded by an in-depth analysis of the company's fundamental values and a comparison with similar stocks.
Here's a snapshot of some important facts to keep in mind about RIVN:
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The stock has trailing 12 month earnings per share (EPS) of $-6.02
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Rivian Automotive has a trailing 12 month Price to Earnings (P/E) ratio of -4.0 compared to the S&P 500 average of 15.97
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The company has a Price to Book (P/B) ratio of 2.16 in contrast to the S&P 500's average ratio of 2.95
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Rivian Automotive is a Consumer Discretionary company, and the sector average P/E and P/B ratios are 22.96 and 4.24 respectively
