Key Takeaways
JPMorgan initiated coverage on Rivian Automotive Inc. (NASDAQ: RIVN) with an “Underweight” rating and a $9 price target, suggesting significant downside for the electric vehicle maker despite a recent earnings beat.
"The negative rating from a major financial institution like JPMorgan could lead to increased selling pressure on Rivian's stock," the bank's note from May 11 said, highlighting concerns over profitability and production challenges.
The $9 price target represents a 40.1% downside from Rivian’s after-hours closing price of $15.02 on May 9. The initiation follows Rivian's first-quarter report, where it posted a narrower-than-expected loss of $0.33 per share on revenue of $1.38 billion, surpassing analyst projections. However, the stock slid 6.5% in after-hours trading following the results, indicating investor anxiety over the company's financial footing.
The bearish call from JPMorgan questions Rivian's path to profitability, a persistent concern for investors even as the company ramps up its lower-priced R2 vehicle platform. While Rivian maintains its 2026 delivery guidance of 62,000 to 67,000 vehicles, the focus now shifts to whether it can overcome supply chain hurdles and high costs to achieve positive gross margins by the end of the year.
In its first-quarter earnings call, Rivian executives expressed confidence in the demand for the new R2 platform and highlighted strategic investments in autonomy and manufacturing efficiency. CEO R.J. Scaringe called the R2 a "game changer" that would be a "key driver of our company’s long-term growth and profitability."
Despite the optimism, the company's gross profit margin was just 1% over the last twelve months, according to its latest report. The EV sector has faced headwinds, with competitors like Tesla Inc. (NASDAQ: TSLA) and Lucid Group Inc. (NASDAQ: LCID) also navigating sales declines and mounting losses. Rivian's ability to scale production of the R2 profitably is seen as the critical test for its long-term viability.
JPMorgan's rating serves as a significant counterpoint to the narrative that Rivian's recent earnings beat and R2 launch have put it on a clear path to success. Investors will be closely watching the initial production ramp and delivery numbers for the R2 model in the second half of 2026 for signs of improved manufacturing efficiency and cost control.
This article is for informational purposes only and does not constitute investment advice.
