DA Davidson reversed course on Rivian on Wednesday, upgrading the EV maker to Neutral from Underperform — six weeks after cutting the rating over concerns about the company’s R2 launch expectations.
The firm’s analyst Michael Shlisky said the stock’s recent decline — down 23.6% year to date as of publication — prompted the move.
DA Davidson maintained a $14.00 price target.
“We are upgrading RIVN to Neutral after the stock’s recent slide,” Shlisky wrote before saying that R2 was priced higher than expected.
“Much of the recent downside to the shares have come from a mixed-at-best investor reaction to the pricing of early R2 trims, which we believe for some consumers were 55% higher than expected,” he added.
The analyst called the pricing gap “not insignificant” and said it represents “just one of the risks that the company will not deliver 20,000-25,000 R2 units this year and deliver the best mid-size EV SUV launch in 5 years.”
“With the stock back to a more reasonable valuation, however, we’re taking this trade off the table, especially amid other recent developments,” he added.
Rivian shares rose 3.9% on Tuesday as broader markets rallied, with the Dow Jones Industrial Average surging 1,125 points.
US EV makers Tesla and Lucid both rose more than 4%.
Over the past 12 months, Rivian shares are up 20.5%.
February Downgrade
In mid-February, Shlisky downgraded Rivian to Underperform from Neutral and cut his price target to $14 from $15, warning that the company’s upbeat tone on the R2 masked significant execution risks.
The analyst said at the time that the R2 launch target of 20,000 to 25,000 units was aggressive, noting that only the Ford Mustang Mach-E had come close to that level in its debut year — “and it had the since-ended $7,500 Federal EV credit and broad dealer support.”
“RIVN finally provided its thoughts on the ramp-up of R2 deliveries — if met, the numbers will be impressive, but we see significant risks ahead,” Shlisky wrote.
“Among them: a hesitant mass-channel consumer; RIVN’s limited number of sales locations; reduced government incentives; and even low oil prices,” he added.
DA Davidson said it was not questioning the quality of the vehicle.
“Early reviewers appear to love the vehicle,” the firm wrote, adding that it expected the R2 to integrate autonomy upgrades and follow the strong performance of the R1.
“If the R1 is any guide, the R2 will be a very compelling product — however, a lot has to go right for the near-term outlook to be met and we are concerned about headline risk,” Shlisky concluded at the time.
R2 Ramp
Rivian revealed details of the R2 at the SXSW Festival on March 12.
The mid-size SUV will debut with a Performance Dual Motor variant priced at $57,990.
Production is set to begin over the coming weeks at Rivian‘s plant in Normal, Illinois. Deliveries will go to employees first, with external customer deliveries starting in late June — beginning with existing R1 owners.
On the fourth-quarter earnings call, CFO Claire McDonough said R1 and commercial van volumes would be roughly in line with 2025 on a full-year basis, with the R2 ramp accelerating in the second half.
Based on the company’s guidance of 62,000 to 67,000 total deliveries and approximately flat R1 and van volumes, Rivian is implicitly expecting to deliver roughly 19,700 to 24,700 R2 vehicles this year.
Last year, according to Cox Automotive data, Rivian sold 24,852 R1S units, 7,416 R1T pickups, and 9,830 electric delivery vans.
Founder and CEO RJ Scaringe has said the bill of materials for the R2 is “roughly” half that of the R1, calling it a “dramatic reduction in the cost structure to build it.”
