Morgan Stanley Cuts Rivian Price Target: EV Maker Needs To Restore Confidence It Can Be 'The One' To Challenge Tesla

Rivian Automotive Inc RIVN is facing a new reality after its blockbuster listing last year and needs to ‘pace itself’ in the near term to be able to reinforce confidence that it has the potential to be "the one" that can challenge Tesla Inc TSLA in the long run, according to Morgan Stanley analyst Adam Jonas.

The Rivian Analyst: Jonas has maintained an ‘overweight’ rating on Rivian but slashed the price target from $85 to $60. The electric vehicle startup’s shares closed at $24.8 on Monday.

The Rivian Thesis: Jonas on Monday lowered Rivian’s delivery estimates to 15,500 electric vehicles this year, 40,000 units in 2023, 125,000 units in 2025 and 800,000 electric vehicles in 2030.

“Each year revised down versus our prior forecast of 177,000, 50.000, 205,000 and 1 million units respectively,” Jonas said. “Our downward revision reflects near-term supply constraints and a greater emphasis on cost control versus prior volume aspirations.”

The analyst took into account that Rivian would be a company with two to three factories by 2030.

“For reference, Tesla crossed the 800,000 unit market annual run-rate in mid-2021.”

Jonas also lowered Rivian’s 2023 revenue to $7.3 billion, compared with $10.4 billion earlier.

Rivian’s Q1 Performance: Irvine, California-based Rivian earlier this month maintained its production forecast of 25,000 vehicles for 2022 and said supply-chain problems are expected to ease later this year.

Jonas had on Tuesday estimated Rivian could burn $7 billion in cash this year and could raise an additional $3 billion of capital by the year-end to fund its “extraordinarily capital intensive” production ramp-up.

Price Action: Rivian closed 6.8% lower at $24.8 on Monday and is down 75.8% year-to-date.

Photo: Courtesy of Rivian