Rivian (NASDAQ:RIVN) made a pledge to investors, and the time to deliver on that promise has arrived. The EV maker reports its Q4 earnings today after the close, marking the point at which it said it would break even on gross profit for the first time.
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Unfortunately for the bulls, Bernstein analyst Daniel Roeska doubts Rivian is up to the task.
“We expect Rivian to fall short of its improvement goals set out at the beginning of 2024,” Roeska said.
The reason for that, according to the analyst, is quite simple. In Q3, the company reported a loss of $39,000 per vehicle. Regulatory credit sales of $275 million in Q4 will increase gross profit per unit by $18,000. However, Rivian still needs to improve by approximately $20,000 per vehicle to hit its target, despite delivering fewer units than expected.
With that disappointing forecast out of the way, Roeska expects focus will turn to this year’s goals, with margins once again front and center. Rivian’s main challenge will be improving margins while facing slower volume growth. The onus is on the company to continue cutting costs while demonstrating that its higher-trim models can sustain both pricing and demand even in the face of “market headwinds.”
Roeska anticipates volume growth will decelerate, but ongoing improvements of the R1 platform, combined with “supportive pricing” could result in a “materially better performance” than in prior years. Roeska expects the company will guide for 55,000 to 60,000 units for the year, with adj. EBITDA improving to approximately -$1.5 billion.
Beyond financial improvements, the market will be looking for updates on Rivian’s upcoming R2 launch, which is currently expected in the first half of 2026. But according to Roeska, there’s quite a bit at stake here.
“Any material delay to the launch schedule, soft pre-orders, or pricing headwinds are clear negatives for the stock,” the analyst warned. And unfortunately, his forecast leans bearish – he anticipates a “slight delay” in the R2 production ramp, pushing it to Q3 or Q4 of next year rather than 1H26.
Since the launch is still a while away, the “most meaningful” KPI (key performance indicator) to keep an eye on in 2025 will be whether Rivian can execute its capex as planned while the company upgrades its Normal, IL factory. Roeska thinks the company will guide for capex of $1.7 billion but believes actual spending could be closer to $1.4 billion.
All told, Roeska takes a negative stance, assigning an Underperform (i.e., Sell) rating to RIVN shares, while his $6.10 price target implies a steep 55% decline over the next year. (To watch Roeska’s track record, click here)
Roeska may be the loudest bear in the room, but Wall Street remains mixed. Rivian holds a Hold (i.e., Neutral) consensus rating, based on 2 Buys, 7 Holds, and 1 Sell recommendation. The average price target stands at $13.74, suggesting RIVN is likely to stay rangebound for now. (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.
