Rivian's stock sinks after getting downgraded twice this week

Last month, Baird analyst Ben Kallo sent Rivian Automotive's (RIVN) stock surging when he upgraded the EV maker and projected that the company's shares would gain more than 40% in 2026.

Kallo's bullishness was centered around Rivian's impending launch of its new, more affordable R2 SUV this year.

"We expect this to be a boost for RIVN's brand, product demand, and thus by extension the stock as deliveries begin near mid-year," he wrote in a client note.

Kallo wasn't alone in his optimism: Needham analyst Chris Pierce wrote in a client note in August that the R2, which has a starting price of $45,000, “will be substantially expanding RIVN's TAM (total addressable market) beyond the more expensive R1 vehicle."

Pierce added that there's “strong RIVN brand awareness, limited negative perception and encouraging purchase intent, positioning RIVN favorably to capture share as the R2 enters the mid-size SUV segment.”

But Wall Street this week raised questions about whether there are tangible metrics to support the company's recent stock rally.

Wolfe Research analysts, led by Emmanuel Rosner, downgraded Rivian's shares on Tuesday to Underperform from Peerperform, while cutting its price target 16.7% to $16. Rosner sees Rivian's "valuation as disconnected from weaker fundamentals," pointing to upsides that are not likely to materialize until later in the year.

"While the near-term and long-term fundamental setup for RIVN have deteriorated, enthusiasm around RIVN's Autonomy platform has driven a sharp rise in the shares," he said.

Rivian revealed its new Autonomy Platform last month at its inaugural Autonomy & AI Day, held at its headquarters in Palo Alto, California. The company introduced new tech innovations as part of what it called its "software-first approach to autonomy" that includes its first custom computer chip for self-driving.

However, Rosner noted that “unlike TSIA, we do not expect many Autonomy / Al-related potential catalysts, with key launches set for late-2026.”

He also sees delayed benefits from R2 sales for Rivian as well, pointing to "potential downside risks to near- term R2 demand, with volumes likely heavily weighted to Q426."

Rivian's stock has rallied 30.4% over the past 12 months.

UBS analysts, led by Joseph Spak, echoed Wolfe research's concerns about a valuation disconnect with Rivian's shares driven by investor enthusiasm over its autonomy rollout.

Spak pointed out in a client note on Wednesday that the automaker's "stock has been prone to sentiment swings (often driving stock more than fundamentals)" and has gained more than 15% since its Autonomy & AI Day on Dec. 11.

UBS downgraded Rivian's shares to Sell from Neutral, but raised its price target to $15 from. $13.

Spak also expressed doubts about how much of a boost Rivian will get from the R2 launch, indicating that the bank's sales forecast for 2026-27 is between 16%-19% below consensus.

Rivian sold approximately 42,000 cars in 2025, a more than 21% drop from about 52,000 in 2024. Wall Street expects the automaker to sell 68,000 in 2026.

He noted that "while we like the vehicle, expectations may be too high."

Rivian's stock plunged 7.2% on Wednesday.