Rivian stock slumps after BofA downgrade

Rivian Automotive Inc (NASDAQ: RIVN), the electric vehicle producer, saw shares fall 7% on Monday after BofA Securities downgraded their stock rating. In BofA's report, analyst John Murphy highlighted several risks, including Rivian's below-the-street 2025 outlook, ramping competition, and near-term uncertainty in the EV sector.

BofA downgraded the stock's rating to Underperform from Neutral, though they maintained a $10.00 price target.

The analyst stated, "2025 outlook was softer than we had expected and the VW partnership is complicating earnings forecasts for at least the next four years. Competition is also increasing with new SUV/CUVs projected to enter the market in 2026/2027 Further, demand for EVs is slowing and may not get much better near-term with indications that the US may pull back on EV incentives. Given the Trump Administration’s focus on cost cutting, we believe there could be risk to RIVN’s $6.6bn Department of Energy loan closed by the Biden Administration on January 16, 2025."

The analyst indicated that the EV market is poised for an oversaturation of sorts as Lucid Group Inc (NASDAQ: LCID), Scout, General Motors Company (NYSE: GM), and Ford Motor Company (NYSE: F) are all poised to be releasing competitors to Rivian's vehicles in the years 2026 and 2027. The increased competition has led BofA to temper expectations, especially as Rivian's R2 line is taking longer than expected to ramp.

In other news, Rivian announced on Friday that it is recalling over 17,000 vehicles in the U.S. because of a headlight issue. The recall was issued for certain 2025 R1S SUVs and R1T pickup trucks, and represents another blow to an already embattled company in one of the more volatile sectors of the market.