Morgan Stanley Maintains Underweight Rating on Rivian Despite Q2 Earnings Beat
Rivian 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 these results due to concerns about dilution from a recent equity sale and rising component costs that could pressure margins as production scales up for the R2 model. Morgan Stanley upgraded Rivian's price target to $14 but kept an underweight rating in its Friday note. The firm highlighted strong demand for the R2 while maintaining skepticism over execution risks, particularly around profitability from vehicle sales and future monetization of software capabilities similar to Tesla’s approach with driver-assistance features. Analysts remain divided on Rivian's outlook: TD Cowen raised its target to $21 with a buy rating, Needham maintained a buy at $23, while Morgan Stanley stayed cautious. The firm is closely watching key milestones such as the launch of point-to-point autonomy and production ramp progress.
Topics: automotive profitability stock_performance