Rivian Climbs 8% After UBS Turns Bullish on the R2 Ramp

Rivian shares climbed 8.5% on Monday, closing at $13.19, after UBS raised its rating on the electric-vehicle maker to buy from neutral. The bank pointed to early demand for the new R2 as reason to look past a weak run in the stock. Trading was heavy. Volume ran about 2.5 times the 20-day average, a sign the call drew a crowd.

A $17 target and a bet on the R2

UBS analyst Joseph Spak lifted Rivian to buy while holding his price target at $17, roughly a third above where the shares had been trading. His argument rested on the R2, the midsize SUV that Rivian is counting on to reach a wider market at a lower price. Spak wrote that initial demand “looks solid” and framed the stock’s recent slide as a chance to buy ahead of a ramp in R2 production and a turn in gross margins. A cheaper, higher-volume vehicle, the thinking goes, should pull the company toward profitability faster than the pricier R1 line has.

Spak also flagged Rivian’s balance sheet as less of a worry than it once was, citing liquidity that in his view removes the need for fresh outside funding for several years. The business did not change overnight. The note reset how one closely watched desk reads it.

The upgrade followed a Q3 beat

Last Thursday, October 29, Rivian reported third-quarter results that gave the bulls something to work with. Revenue rose 38% from a year earlier to $2.155 billion, and deliveries climbed 46% to 19,248 vehicles against 19,751 produced at the Normal, Illinois plant. The R2 was the quarter’s best-selling model. Rivian also narrowed its full-year delivery guidance to a range of 67,000 to 70,000 vehicles, lifting the floor from 65,000, and trimmed its projected adjusted loss for the year.

The software and services unit, a smaller piece of the business, grew faster than the vehicles. Revenue there rose 45% to $605 million in the quarter.

Grinding along the bottom of its range

Monday’s jump lands inside a rough stretch. Even after the pop, Rivian is down nearly 8% over the past 30 days and sits roughly 34% below its 90-day high of $20.14. The close at $13.19 is about 15% above the 90-day low of $11.43, so the shares spent much of the quarter grinding along the bottom of their range before this week. The move Monday ran counter to that drift, driven by a single research note rather than fresh company news.

Rivian sells into a demanding market. Established automakers and Tesla compete for the same buyers, federal EV incentives have shifted, and scaling a new, cheaper model without eroding margins is the problem every mass-market EV hopeful runs into. The R2 is Rivian’s answer, and the next few quarters will show how it sells.

What to watch

The next data point is volume. Rivian typically reports quarterly production and delivery figures in the first days of the following quarter, so the next read on the R2 should arrive in early January. To reach the low end of its raised full-year target, the company needs a strong fourth quarter. Whether the R2’s early reception carries into sustained sales is the question UBS just answered one way, and the delivery count is how the market will check that answer.

This is a general-market summary for information only — not investment advice, and not a recommendation regarding any security.