JPMorgan maintains Underweight rating on Rivian stock at $10 target

On Thursday, JPMorgan analyst Ryan Brinkman reaffirmed an Underweight rating with a $10.00 price target on Rivian Automotive Inc (NASDAQ:RIVN) shares, which currently trades at $12.72 with a market capitalization of $14.6 billion. According to InvestingPro analysis, Rivian’s stock appears fairly valued, with analyst targets ranging from $6.10 to $23.00. The company’s Financial Health Score stands at "FAIR," supported by 10+ exclusive ProTips and comprehensive metrics available to subscribers. Despite a mixed first-quarter report and full-year guidance update, Brinkman noted several positive aspects, such as stronger earnings for the quarter and the unlocking of a second investment tranche from Volkswagen (ETR:VOWG_p). The company’s financial position shows strength with a current ratio of 4.7, indicating solid liquidity. However, he expressed concern over the revised full-year delivery outlook, which is now projected to be between approximately 40,000 and 46,000 vehicles, down from the previous estimate of 46,000 to 51,000. InvestingPro data reveals concerning metrics, including a negative gross profit margin of -24.14% and significant cash burn, details of which are available in the comprehensive Pro Research Report. This represents a significant year-over-year decline from the approximately 52,000 vehicles delivered in 2024.

The analyst pointed out that Rivian’s first quarter was better than expected, surpassing metrics such as revenue, which reached $1,240 million against JPMorgan’s estimate of $986 million and the Bloomberg consensus of $991 million. This contributes to the company’s trailing twelve-month revenue of $4.97 billion, representing a 12.09% growth rate. For deeper insights into Rivian’s financial performance and growth trajectory, investors can access detailed analysis through InvestingPro’s exclusive research tools. Adjusted EBITDA loss was reported at -$329 million, compared to JPMorgan’s forecast of -$426 million and the consensus of -$546 million, with free cash flow at -$526 million versus the Street’s expectation of -$814 million. Brinkman acknowledged the quarter’s genuine improvement and the continued progress in cost of goods sold (COGS) and underlying gross margin traction.

However, Brinkman also highlighted that the quarter benefited from the accelerated sale of regulatory credits, which amounted to $157 million in the first quarter versus JPMorgan’s model of $43 million. Without these additional credit sales, the adjusted EBITDA would have been closer to the firm’s initial expectations. While the full-year guidance for adjusted EBITDA remains unchanged, despite lower delivery forecasts and increased tariff costs, the analyst expressed concerns about the decline in full-year deliveries and its potential impact on Rivian’s growth stock valuation.

Brinkman also mentioned investor concerns about Rivian’s performance until the expected launch of the R2 model in 2026. With the updated outlook suggesting a possible near-term demand issue and the risk of the $7,500 federal consumer tax credit being repealed, Brinkman sees a challenging narrative emerging for Rivian. Adjusting his forecasts to account for the first-quarter performance and the new full-year delivery estimates, he now predicts a full-year adjusted EBITDA loss of -$1.8 billion, slightly worse than the previous -$1.7 billion forecast. The price target remains unchanged at $10, with management’s strategy to maximize regulatory credit sales in the face of potential regulatory changes later in the year.

Brinkman’s analysis indicates a potential downside risk to Rivian’s estimates and to other electric vehicle manufacturers like Tesla (NASDAQ:TSLA), should the federal government revoke California’s vehicle emissions waiver, which could affect regulatory credit sales. Conversely, traditional automakers like GM and Ford could benefit from such a regulatory shift.

In other recent news, Rivian Automotive Inc has announced several key developments impacting its financial outlook. The company reported first-quarter 2025 results that exceeded expectations, with revenue reaching $1.24 billion, surpassing the anticipated $997.7 million, driven by strong demand and higher average selling prices. However, Rivian has adjusted its full-year 2025 delivery guidance downward to between 40,000 and 46,000 vehicles, citing potential impacts from changing trade regulations and tariffs. Despite these challenges, the company reaffirmed its adjusted EBITDA outlook for 2025, projecting a range of negative $1,700 million to negative $1,900 million.

Analysts have responded to these developments with mixed reactions. Cantor Fitzgerald maintained a Neutral rating with a $15 target, while UBS raised its price target to $13, highlighting a significant $1 billion equity investment from Volkswagen. TD Cowen also increased its price target to $14, acknowledging Rivian’s improved gross margins in the first quarter. Stifel maintained a Buy rating with a $16 target, noting the company’s ability to generate a gross profit and maintain its EBITDA outlook. Meanwhile, Wedbush adjusted its price target to $18, citing strong revenue performance but acknowledging the revised delivery forecast.

Rivian’s strategic moves include preparing for the launch of its R2 line and hosting an AI and Autonomy Day in fall 2025 to showcase advancements in autonomous driving technology. These developments reflect Rivian’s efforts to navigate a complex automotive landscape while positioning itself for future growth.

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