Rivian Stock Down 20% in Past Week — But Why, Really? – CleanTechnica

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I listened to Rivian’s shareholder call last week to see what I could learn about Rivian’s recent past, present, and future. There was a lot of focus on the coming R2, which is expected to be the company’s [NASDAQ:RIVN] first truly mass-market model, but it felt a little bit like the focus on the R2 was to avoid some other topics (i.e., fairly weak sales targets for 2025). There was also an emphasis on the company’s plans to create even better advanced driver assist systems (ADAS), but without getting close to the much-hyped goal other companies have of robotaxi-level self-driving. While I think it’s admirable to hear what the company is doing, and everything the company has done up until now would give you the expectation that Rivian’s continued ADAS work will be very carefully and effectively implemented, you’re just not going to get investors very excited about non-robotaxi-level ADAS these days.

There were several good things in Rivian’s shareholder update, and one could definitely argue there was more good than bad. However, the stock is down 20% in the last five days, and this article is supposed to focus on why that is, so let’s wrap that up first. The simple reason why the stock collapsed must be Bank of America analysts downgrading the stock and putting it in the “sell” category. It stands out from the crowd in doing that, but investors may be scared this is just the first major analyst to get so negative on the stock and others will follow. Bank of America’s reasoning for the “sell” recommendation is a weaker than expected 2025 sales target (as briefly mentioned above), a weakened EV market due to the Trump administration’s anti-EV stance, growing competition from other EV companies as well as legacy automakers, and the difficulty of scaling up production and demand enough — and efficiently enough — to start turning a profit within the coming year. As a result of all that, Bank of America moved its RIVN price target from $13 to $10, quite a drop, and moved from “neutral” to “sell.” Though, all of this could just be short-term trading (including from bots) and perhaps the stock will bounce back before long.

So, let’s move on to some of the positive news from Rivian and why several major analysts have the stock as a “buy” rather than a “sell” or even a neutral “hold.” Here are some positive points:

• Rivian’s net loss in Q4 2024 dropped 51% compared to Q4 2023, from $1.521 billion to $744 million, and the company has ongoing plans to further decrease losses and eventually make a profit.
• Q4 2024 revenue grew 32% compared to Q4 2023, from $1.3 billion to $1.7 billion.
• Across all of 2024, the company’s net loss declined by 12.6% compared to 2023, from $5.432 billion in 2023 to $4.747 in 2024.
• Furthermore, for 2025, the company expects an adjusted EBITDA loss of $1.7–1.9 billion, a significant drop compared to 2024 and 2023. (Of course, that’s still a notable loss, but the company is headed in the right direction and has the cash to cover these ongoing losses.)
• Rivian has more cash than debt, and it expects to reach R2 production without running into financial challenges.
• Rivian achieved positive gross profit in the 4th quarter of 2024 and it expects to reach positive gross profit across the whole of 2025. Its 4th quarter gross profit results were better than expected, reaching $170 million gross profit, and it was the first quarter that Rivian achieved positive gross profit.
• Part of Rivian’s achievement reaching positive gross profit came from considerable cost reductions, and executives spoke about the company’s ongoing focus on such cost reductions on the shareholder and analyst conference call.
• Rivian execs also talked about the company’s growing partnership with Volkswagen, which could be a critical short-term, medium-term, and long-term partnership for Rivian.
• Executives on the call also noted that Rivian was started to sell its commercial electric vehicles to delivery companies beyond Amazon and other commercial entities (such as electricians, plumbers, florists, dog groomers, and dry cleaners). There seems to be considerable demand for Rivian’s electric vans, and that shouldn’t really surprise anyone when Amazon agreed to buy 100,000 of them and has been adding them to the company’s fleet quite rapidly.
• Rivian execs also noted growing revenue from selling regulatory credits, something that could continue growing as the company achieves more sales and perhaps also if Tesla sales continue to decline.
• The company also recently secured a US Department of Energy loan for several billion dollars (just in time).

Analysts at Stifel have a “buy” rating on RIVN and a price target of $16. Guggenheim Securities also has a “buy” rating and price target of $16 on the company. Benchmark has a “buy” rating and a price target of $18 on the company. Needham has a “buy” rating on RIVN and raised its price target to $17. DA Davidson, meanwhile, maintained a “neutral” rating and has a price target of $13 on the company (which, admittedly, is now above the $11.45 the stock is at after falling 20% in the past 5 days).

Overall, despite all the variance in price targets and Bank of Americas Securities now putting a “sell” recommendation on the company, it appears analysts are largely in agreement that Rivian posted positive numbers and improvement in 2024, but consumer demand is uncertain and there are concerns about 2025 targets. Also, as everyone knows, it’s not easy to ramp up production of a mass-market model, especially your first one. While Rivian has big plans for the R2 (not to mention the even cheaper and smaller R3), those could come crashing down if things don’t go well in a variety of different arenas. Furthermore, there is great uncertainty about where the US economy is headed in general, especially with so many unprecedented, unpredictable, risky, and downright harmful changes coming from the Trump administration and “shadow president” Elon Musk, who, of course, happens to be the CEO of Rivian rival Tesla.

While Rivian’s stock price dropped 20% in the past week, is down almost 11% going back one month, and is also down ~20% going back 6 months, it should be noted that the stock is up 7% going back one year. I think the takeaway with Rivian is that you can look at it in an optimistic light, seeing its progress, its potential, and the massive upside if it achieves its goals; or you can look at it more pessimistically, focusing on the challenges and uncertainty in the US EV market, the difficulty scaling up a mass-market model, the questionable political and economic environment in the next couple of years, and just how hard it is to become a profitable company, especially in the auto business. Which side do you take on all of that?

Disclosure: I do not hold any shares of RIVN, and I’m having a hard time deciding whether I’m bullish or bearish on the company’s coming year — see the previous paragraph or the full article above for an explanation why.