Bernstein: 'Why Rivian Automotive Inc (RIVN) Is Not Likely to Overcome Its Scale Disadvantage'

Bernstein SocGen Group analyst Daniel Roeska reiterated an Underperform rating and $6.10 price target on Rivian Automotive Inc (NASDAQ: RIVN).

The analyst commented: "Rivian has launched an exciting brand, but the low U.S. BEV penetration and limited product range confine the company’s addressable market. BEV growth and new models will expand the U.S. addressable market to c. 1.3m - 1.5m units by 2030, and continued BEV growth and models expansion could push Rivian’s U.S. addressable market to 6.7m units by 2040. However, this may still not be enough to provide sufficient scale to the business in the longterm.

Bottom line: the best case is not good enough. At c. 500k vehicles p.a. in 2030e, we forecast Rivian achieving 15% gross margin and break-even on EBIT and FCF. However, until then, Rivian will still burn through 16bn of cash and shareholders will face significant dilution from the Volkswagen Joint Venture. To continue growing in the U.S. and building its international presence, Rivian will require still more financial resources beyond 2030.

We rate Rivian Underperform with a target price of $6.10. We value our 2030 revenue forecast at an ambitious 1.1x EV/Sales multiple and discount that back to today in order to reach our $6.10 price target. While our valuation focuses on the long-term shape of the business, we see the company missing 2026 EBITDA estimates by -30% as the near-term catalyst, driven by a slower ramp-up of new models, delayed cost reduction, and utilization risk on new production lines."

For an analyst ratings summary and ratings history on Rivian Automotive Inc click here. For more ratings news on Rivian Automotive Inc click here.

Shares of Rivian Automotive Inc closed at $10.75 yesterday.

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