Investor's Corner
Rivian stock outlook remains bullish despite narrow 2022 production miss
Despite a near miss on its production goal for 2022, institutional investors are maintaining their buy ratings for Rivian stock.
Rivian (NASDAQ: RIVN) went public only 14 months ago, and since then, it has not exactly had a great time of it. From its IPO peak, Rivian stock has fallen by over 80%, and the poor macroeconomic conditions of the past year have not aided that situation. Nonetheless, large institutional investors see the electric truck maker as an opportunity and have maintained high price targets and “buy” ratings.
Rivian reported its production numbers yesterday, and while the company was kissing its 25,000 vehicle production target for 2022, a goal many worried the company would never come close to, it missed the goal narrowly by just a couple hundred vehicles. Luckily, this near miss has been taken well by investors who have not exactly rushed to sell the stock. Rivian is only down today by less than a percent. This has been reflected by major investors maintaining high price targets and “buy” ratings.
Morgan Stanley is one such investor who remains bullish on Rivian. The prominent investor only lowered its price target by $5 to $55, still a 220% increase from its current share price.
Adam Jonas of Morgan Stanley explains the decision by pointing out Rivian’s relative production strength. “For a year that started tough with a cut to IPO production and delivery estimates, RIVN managed to increase both production and deliveries Q/Q throughout the year, with 4Q deliveries over 550% higher than that of 1Q,” says Mr. Jonas. “We expect to see RIVN continue to scale production next year and maintain our FY23 delivery estimate of 50k vehicles.”
Other large investors have echoed Morgan Stanley’s optimism, and some have even gone further. At the end of last year, Wells Fargo increased its price target from $32 to $35 and maintained its buy rating. As did Deutsche Bank, which increased its price target from $43 to $44 and maintained its buy rating. Overall, one would be hard-pressed to find an institutional investor bearish on the stock.
Perhaps the best synopsis of how investors are feeling regarding the truck maker was stated by an analyst at Motley Fool today. Regarding Rivian’s production report, Beth McKenna says that “investors should be satisfied.”
But that brings us to the question if so many are so optimistic about the Rivian stock, why has it continued to fall, and why has it not recovered to its IPO price? A couple of hurdles come to mind. Foremost, as the Federal Reserve has continued to increase interest rates to battle inflation in the United States, many anticipate some sort of recession in the coming months or year. And if this were to occur, it could easily damage high price products such as automotive sales.
But more specifically, regarding Rivian, the company still has a steep hill to climb before it can be considered a major player in the automotive market. While it has done wonders to take production from the single digits to the thousands they are producing now, other automakers, especially those in the truck space, produce by the millions annually. Frankly, catching up is still a daunting task.
Rivian has seen amazing growth over the past year, and there is no doubt that it is becoming an ever-more prominent player in the automotive market. And if institutional investors are to be believed, it may be the next major disruptor in an industry that legacy players primarily dominate.
William is not an investor in Rivian.
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Tesla received a price target boost from Morgan Stanley, according to a new note on Monday morning, but there is some considerable caution also being communicated over the next year or so.
Morgan Stanley analyst Andrew Percoco took over Tesla coverage for the firm from longtime bull Adam Jonas, who appears to be focusing on embodied AI stocks and no longer automotive.
Percoco took over and immediately adjusted the price target for Tesla from $410 to $425, and changed its rating on shares from ‘Overweight’ to ‘Equal Weight.’
Percoco said he believes Tesla is the leading company in terms of electric vehicles, manufacturing, renewable energy, and real-world AI, so it deserves a premium valuation. However, he admits the high expectations for the company could provide for a “choppy trading environment” for the next year.
He wrote:
“However, high expectations on the latter have brought the stock closer to fair valuation. While it is well understood that Tesla is more than an auto manufacturer, we expect a choppy trading environment for the TSLA shares over the next 12 months, as we see downside to estimates, while the catalysts for its non-auto businesses appear priced at current levels.”
Percoco also added that if market cap hurdles are achieved, Morgan Stanley would reduce its price target by 7 percent.
Perhaps the biggest change with Percoco taking over the analysis for Jonas is how he will determine the value of each individual project. For example, he believes Optimus is worth about $60 per share of equity value.
He went on to describe the potential value of Full Self-Driving, highlighting its importance to the Tesla valuation:
“Full Self Driving (FSD) is the crown jewel of Tesla’s auto business; we believe that its leading-edge personal autonomous driving offering is a real game changer, and will remain a significant competitive advantage over its EV and non-EV peers. As Tesla continues to improve its platform with increased levels of autonomy (i.e., hands-off, eyes-off), it will revolutionize the personal driving experience. It remains to be seen if others will be able to keep pace.”
Additionally, Percoco outlined both bear and bull cases for the stock. He believes $860 per share, “which could be in play in the next 12 months if Tesla manages through the EV-downturn,” while also scaling Robotaxi, executing on unsupervised FSD, and scaling Optimus, is in play for the bull case.
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Meanwhile, the bear case is placed at $145 per share, and “assumes greater competition and margin pressure across all business lines, embedding zero value for humanoids, slowing the growth curve for Tesla’s robotaxi fleet to reflect regulatory challenges in scaling a vision-only perception stack, and lowering market share and margin profile for the autos and energy businesses.”
Currently, Tesla shares are trading at around $441.
Tesla bear Michael Burry got blunt with his beliefs over the company’s valuation, which he called “ridiculously overvalued” in a newsletter to subscribers this past weekend.
“Tesla’s market capitalization is ridiculously overvalued today and has been for a good long time,” Burry, who was the inspiration for the movie The Big Short, and was portrayed by Christian Bale.
Burry went on to say, “As an aside, the Elon cult was all-in on electric cars until competition showed up, then all-in on autonomous driving until competition showed up, and now is all-in on robots — until competition shows up.”
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For a long time, Burry has been skeptical of Tesla, its stock, and its CEO, Elon Musk, even placing a $530 million bet against shares several years ago. Eventually, Burry’s short position extended to other supporters of the company, including ARK Invest.
Tesla has long drawn skepticism from investors and more traditional analysts, who believe its valuation is overblown. However, the company is not traded as a traditional stock, something that other Wall Street firms have recognized.
While many believe the company has some serious pull as an automaker, an identity that helped it reach the valuation it has, Tesla has more than transformed into a robotics, AI, and self-driving play, pulling itself into the realm of some of the most recognizable stocks in tech.
Burry’s Scion Asset Management has put its money where its mouth is against Tesla stock on several occasions, but the firm has not yielded positive results, as shares have increased in value since 2020 by over 115 percent. The firm closed in May.
In 2020, it launched its short position, but by October 2021, it had ditched that position.
Tesla has had a tumultuous year on Wall Street, dipping significantly to around the $220 mark at one point. However, it rebounded significantly in September, climbing back up to the $400 region, as it currently trades at around $430.
It closed at $430.14 on Monday.
Investor's Corner
Mizuho keeps Tesla (TSLA) “Outperform” rating but lowers price target
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected.
Mizuho analyst Vijay Rakesh lowered Tesla’s (NASDAQ:TSLA) price target to $475 from $485, citing potential 2026 EV subsidy cuts in the U.S. and China that could pressure deliveries. The firm maintained its Outperform rating for the electric vehicle maker, however.
As per the Mizuho analyst, upcoming changes to EV incentives in the U.S. and China could affect Tesla’s unit growth more than previously expected. The U.S. accounted for roughly 37% of Tesla’s third-quarter 2025 sales, while China represented about 34%, making both markets highly sensitive to policy shifts. Potential 50% cuts to Chinese subsidies and reduced U.S. incentives affected the firm’s outlook.
With those pressures factored in, the firm now expects Tesla to deliver 1.75 million vehicles in 2026 and 2 million in 2027, slightly below consensus estimates of 1.82 million and 2.15 million, respectively. The analyst was cautiously optimistic, as near-term pressure from subsidies is there, but the company’s long-term tech roadmap remains very compelling.
Despite the revised target, Mizuho remained optimistic on Tesla’s long-term technology roadmap. The firm highlighted three major growth drivers into 2027: the broader adoption of Full Self-Driving V14, the expansion of Tesla’s Robotaxi service, and the commercialization of Optimus, the company’s humanoid robot.
“We are lowering TSLA Ests/PT to $475 with Potential BEV headwinds in 2026E. We believe into 2026E, US (~37% of TSLA 3Q25 sales) EV subsidy cuts and China (34% of TSLA 3Q25 sales) potential 50% EV subsidy cuts could be a headwind to EV deliveries.
“We are now estimating TSLA deliveries for 2026/27E at 1.75M/2.00M (slightly below cons. 1.82M/2.15M). We see some LT drivers with FSD v14 adoption for autonomous, robotaxi launches, and humanoid robots into 2027 driving strength,” the analyst noted.
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