TLDR
- Rivian achieved its first-ever gross profit of $170 million in Q4 2024
- Bank of America downgraded Rivian stock to “underperform,” lowering price target to $10
- Rivian shares fell 8-10% following the downgrade despite the positive Q4 milestone
- The company projects slightly lower deliveries for 2025 (46,000-51,000 vehicles)
- Analysts cite changing policies under the Trump administration and increasing competition as concerns
Rivian (RIVN) shares tumbled almost 10% on Monday, reaching a new yearly low despite the electric vehicle maker hitting a major milestone with its first-ever gross profit in the fourth quarter of 2024. The stock decline came after Bank of America downgraded Rivian’s rating from “neutral” to “underperform” and cut its price target to $10 from $13, citing concerns about future demand and potential policy changes under the Trump administration.
The company’s fourth quarter results showed a gross profit of $170 million, marking a massive $776 million improvement compared to the same period in 2023. CEO RJ Scaringe highlighted “meaningful” cost reductions, noting that the company had removed $31,000 in automotive cost of goods sold per vehicle delivered in Q4 2024 compared to Q4 2023.
These cost improvements came after Rivian temporarily shut down its manufacturing plant in Normal, Illinois last April for upgrades and launched its second-generation R1 vehicles. The factory upgrades appear to have paid off in terms of manufacturing efficiency, though the company now faces new challenges.
For the full year 2024, Rivian built 49,476 vehicles and delivered 51,579 to customers. However, the company is projecting slightly lower deliveries for 2025, between 46,000 and 51,000 vehicles. This more conservative outlook is due to several external factors, including changing government policies and expected lower deliveries of Electric Delivery Vans (EDVs) to Amazon following higher output in Q4.
Bank of America analysts expressed concern about this delivery forecast, describing it as “softer than expected” in their downgrade note. They warned that “there could be more downside risk if policy changes are enacted” under the Trump administration, which has indicated less support for electric vehicles than the previous administration.
The analysts also raised concerns about Rivian’s $6.6 billion Department of Energy loan, which was closed by the Biden Administration on January 16. “Given the Trump Administration’s focus on cost-cutting, we believe there could be a risk to RIVN’s $6.6 billion Department of Energy loan,” the Bank of America analysts noted in their report.
Intensifying competition in the electric SUV and crossover market was another factor in the downgrade. Bank of America pointed to new models expected to enter the market over the next two years from companies including Lucid (LCID), Volkswagen’s Scout brand, General Motors’ (GM) Chevrolet division, and Ford (F), all of which could impact Rivian’s sales.
Rivian remains one of the most viable” EV startups
Despite these concerns, Bank of America did acknowledge that Rivian remains “one of the most viable” EV startups in the market. The company’s joint venture with Volkswagen, finalized in the fourth quarter and worth up to $5.8 billion, was noted as a positive development, though it is “complicating earnings forecasts for at least the next four years.”
Rivian plans to begin production of its more affordable R2 SUV early next year at its Normal plant. With a starting price of $45,000, the R2 will be nearly half the cost of the current R1S and R1T models, potentially opening up a broader market for the company. Production is expected to ramp up at Rivian’s new EV plant in Georgia.
Not all analysts share Bank of America’s negative outlook. Following the Q4 results, Needham raised its price target for Rivian from $14 to $17, while Wells Fargo increased its target to $14 from $11, maintaining an “Equal-Weight” rating. According to data tracked by Visible Alpha, Bank of America now represents the lone “sell” or equivalent rating among analysts covering Rivian, with four “buy” and ten “hold” ratings.
The contrasting analyst views reflect the uncertainty surrounding Rivian’s future in a rapidly evolving EV market and changing political landscape. While the company has made clear progress on manufacturing efficiency and cost reduction, questions remain about demand, competition, and potential policy shifts.
Despite Monday’s drop to around $11.90 per share, Rivian stock was still up approximately 11% over the past year, showing some resilience despite the recent volatility and mixed outlook from Wall Street.
The company’s path forward will likely depend on several factors, including its ability to successfully launch the more affordable R2 model, navigate potential policy changes under the new administration, and maintain its competitive position as more electric SUVs and trucks enter the market.
For investors, Rivian presents a mixed picture – on one hand, the company has achieved its first gross profit and secured substantial funding through its Volkswagen partnership, but on the other hand, it faces increasing competition and political uncertainty that could impact its growth trajectory.
At the time of writing, Rivian shares were trading at approximately $11.90, down over 8% following the Bank of America downgrade, reflecting the market’s cautious response to these complex factors affecting the company’s outlook.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
