Why RIVN Is Losing Ground Today

EV maker Rivian (RIVN) is giving back 3% today after wealth manager Bernstein started coverage of the shares with an Underperform rating.

Why Bernstein Is Bearish on RIVN

Bernstein believes that the automaker can achieve its goal of handing over 500,000 EVs by 2030, but the wealth manager does not believe that RIVN’s attainment of this milestone will provide its shareholders  with “financial success.”

A state-of-the-art electric vehicle charging at a station at a suburban mall.

That’s because, according to Bernstein, the company’s gross margins will only be about 15% by the end of this decade. Additionally, Bernstein believes that Rivian will burn $14 billion of cash before it breaks even.

Finally, RIVN will be hindered by the decelerating growth of its markets, stepped-up competition, and the relatively low ceiling of its addressable market, Bernstein warned.

The wealth manager placed a $6.10 price target on the name.

Rivian Not “Particularly Worried” by Trump’s Policies

On Jan. 23, RIVN CEO RJ Scaringe said that he was not “particularly worried” about the Trump administration’s anti-EV stance.

“I don’t think we’re particularly worried about any of it because whatever happens will be equally applied to all, I think in the end it’s sort of like there’s small speed bumps along the way and it’s on us to respond to whatever that environment is,” the CEO explained.

While we acknowledge the potential of RIVN, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RIVN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: The writer owns shares of RIVN but does not intend to trade them in the next 48 hours. This article is originally published at Insider Monkey.