Rivian Automotive (RIVN) delivered better-than-expected first-quarter results, but Jefferies’ five-star analyst Philippe Houchois remains cautious on the stock. On Wednesday, Houchois downgraded the stock to Hold from Buy, citing limited visibility into near-term demand and ongoing uncertainties around new product rollouts. His price target of $16 per share remains unchanged, implying an upside of 7.96% from current levels.
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It is worth noting that Houchois ranks 396 out of more than 9,554 analysts tracked by TipRanks. He has a success rate of 55%, with an average return per rating of 16.3% over a one-year timeframe.
Reasons for the Downgrade
- Accounting Boost, Not Core Growth: Rivian’s Q1 beat was partly driven by a change in accounting. Rivian began recognizing a portion of a previously received $1.3 billion software licensing fee from Volkswagen, which inflated revenue figures without reflecting actual hardware sales growth.
- Weaker Demand Outlook: Houchois revised his full-year delivery forecast down by 12% to 43,000 units, citing a more subdued demand environment. This new estimate still falls within Rivian’s guidance range of 40,000 to 46,000 vehicles.
- Negative Margins Persist: Although Rivian made progress on costs, its adjusted gross margin remained negative at 9%. In addition, hardware revenue declined in Q1 due to lower deliveries, signaling that profitability hurdles remain.
- Cash Burn Still High: Jefferies expects Rivian to post an adjusted EBIT loss of $3.35 billion in 2025, along with negative free cash flow of $2.8 billion. These figures underscore Rivian’s ongoing financial strain as it ramps up production and scales operations.
Rivian Shows Progress on Costs and Software Strategy
Despite the downgrade, Houchois acknowledged that Rivian is making meaningful strides in certain areas. The company has cut R1 vehicle costs by $11,000 from the prior quarter and $25,000 from a year ago, reflecting improved efficiency and stronger cost control.
Moreover, the analyst sees long-term promise in Rivian’s software-defined vehicle (SDV) strategy, which involves using in-house software to control vehicle functions and enable over-the-air (OTA) updates, potentially opening doors to third-party opportunities. Also, he believes that the company’s “brand equity” remains strong, and the deal with German automotive manufacturer, Volkswagen (VWAPY), points to future gains in vehicle software and “architecture.”
Is RIVN Stock a Buy or Sell?
On TipRanks, Wall Street is sidelined on Rivian stock, with a Hold consensus rating based on seven Buys, 15 Holds, and four Sell recommendations. The average RIVN stock price target of $14.04 implies about 5.26% downside risk. RIVN stock has risen 11.43% so far in 2025.
