Rivian’s (NASDAQ:RIVN) Q4 report had quite a bit to like about it and as promised, the company managed to turn gross profit positive for the first time.
However, shares have been on a downtrend since last week’s readout and the reason for the negative reaction has to do with the EV maker’s outlook. The company expects to sell about 48,500 cars this year, but Wall Street was looking for 55,000. Additionally, Rivian is calling for an adj. EBITDA loss between ($1.9) billion and ($1.7) billion. While that represents an improvement to last year’s losses of ($2.7) billion, it still fell shy of the ($1.7) billion consensus estimate.
The muted forecast also informs BofA analyst John Murphy’s post-earnings assessment. “RIVN remains one of the most viable among the startup EV OEMs and is making progress towards sustainably positive gross margins,” the analyst said. “However, the 2025 outlook was softer than we had expected and the VW partnership is complicating earnings forecasts for at least the next four years.”
Furthermore, says Murphy, the demand for EVs is declining and probably won’t improve significantly in the near future, while there are signs the U.S. could scale back EV incentives. Considering the Trump Administration’s emphasis on cost reduction, the analyst also believes Rivian’s $6.6 billion Department of Energy loan – approved under the Biden Administration in January – is at risk.
There’s also the small matter of growing competition. An increasing number of electric SUVs/CUVs are entering the market, and when combined with what appears to be a “slower-than-expected ramp” of the R2, this could impact Rivian’s long-term volume growth. As a result, Murphy has adjusted his volume forecasts downward. Looking at the competition, Lucid has introduced the Gravity SUV and plans to launch a mid-sized SUV/CUV in late 2026. Scout aims to begin production of the Traveler SUV and Terra Truck in 2027, which seem poised to “compete directly” with Rivian’s offerings but at a significantly lower price, with base models starting at under ~$60,000. Additionally, Murphy thinks GM’s Chevrolet Blazer EV and Ford’s Skunkworks CUV could enter the market in 2027.
The implication of all the above is a downgrade from Murphy, who reduces his RIVN rating from Neutral to Underperform (i.e., Sell). Murphy’s price objective also goes from $13 to $10, implying the stock now has downside of 14% in it. (To watch Murphy’s track record, click here)
2 other analysts join Murphy in the bear camp and with an additional 11 Holds and 6 Buys, the stock claims a Hold consensus rating. Still, there are some decent gains projected here; the average target stands at $14.43, suggesting the stock will climb 24.5% higher in the months ahead. (See Rivian stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.