DA Davidson analysts on Tuesday downgraded electric-vehicle maker Rivian to underperform, arguing that optimism around the company’s upcoming R2 model may understate how difficult a successful launch will be.
Analyst Michael Shlisky reduced the stock rating from neutral and lowered the firm’s price target to $14 from $15. Shlisky wrote that Rivian faces the task of delivering "the best mid-size EV launch since 2021 - without the benefit of tax credits or a mass-channel dealer network."
Central to DA Davidson’s concern is the market expectation for R2 deliveries in 2026. The firm described forecasts in the 20,000 to 25,000 unit range as aggressive, noting that only one model has approached that level in its debut year and did so with support from a now-ended $7,500 Federal EV credit and broad dealer distribution.
The note followed Rivian’s fourth-quarter results. Adjusted EBITDA of -$465 million exceeded expectations, but revenue of $1.29 billion came in below the company’s own estimate. For the year ahead, Rivian guided to 62,000 to 67,000 vehicle deliveries and projected adjusted EBITDA losses between -$2.1 billion and -$1.8 billion.
DA Davidson made clear it is not dismissing the R2’s product merit. "Early reviewers appear to love the vehicle," the analysts said, and they expect the R2 to incorporate autonomy upgrades while mirroring the R1’s strengths. In DA Davidson’s view, the R1 impressed with its acceleration, high-quality interior, and novel features.
"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.
Despite positive early signals on product quality, DA Davidson emphasized multiple execution risks. The firm highlighted a hesitant mass-channel consumer, a limited number of Rivian sales locations, reduced government incentives and the dampening effect of low oil prices as factors that could impede a rapid ramp.
Summing up its position, DA Davidson said: "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." The firm concluded that these risks justify the move to an underperform rating.
Context for investors
- Rivian’s adjusted EBITDA beat expectations in the fourth quarter, while revenue missed the company's forecast.
- The company’s guidance anticipates material vehicle deliveries and continued adjusted EBITDA losses for the current year.
- DA Davidson acknowledges product quality but lowers its outlook due to concern about ramp execution and market conditions.