Morgan Stanley Maintains Underweight Rating on Rivian Despite Price Target Increase
Rivian (RIVN) reported a strong second-quarter performance with revenue rising 27% year-over-year to $1.658 billion and gross profit of $179 million, reversing from a loss in the same period last year. However, its stock fell over 9%, despite beating expectations, due to concerns around dilution from a recent equity sale and rising component costs threatening margins as production scales up for the R2 model. Morgan Stanley raised its price target on Rivian to $14 per share but kept an underweight rating. The firm attributed this decision to ongoing risks in execution despite strong demand signals, particularly around software monetization potential similar to Tesla’s driver-assistance revenue streams. Analysts remain divided: TD Cowen and Needham both issued higher buy ratings with price targets of $21 and $23 respectively. Key watchpoints for Morgan Stanley include Rivian's ability to launch point-to-point autonomy by year-end, progress on its in-house RAP1 chip development, and whether the company can meet its revised delivery guidance. The joint venture with Volkswagen contributed significantly to software revenue but does not offset losses from vehicle production.
Topics: automotive industry Morgan Stanley Rivian stock upgrade