Shares of Rivian Automotive (RIVN 6.10%) were trading higher on Monday. Rivian last Thursday unveiled two future models to widespread acclaim, leading one Wall Street bank to boost its price target on the stock on Monday morning.
As of 1 p.m. ET, Rivian's shares were up about 3.4% from Friday's closing price.
Two new Rivians are coming and they look good
In a new note on Monday morning, analysts at UBS raised the bank's price target on Rivian to $9, from $8. But the bank maintained its previous sell rating on Rivian's shares, citing concerns about the company's cash reserves.
Last Thursday, Rivian revealed two new models: The R2, a midsize SUV that was widely expected, and a smaller, rugged-looking hatchback called the R3, which was a surprise. The company also began taking reservations on the R2, which Rivian aims to launch in early 2026 at a starting price of about $45,000.
Rivian said its new R2 SUV, revealed last week, will launch in the first half of 2026 at a starting price of about $45,000. Image source: Rivian Automotive.
Analysts and automotive journalists were extremely positive on both designs, and -- at least for the R2 -- public response has been strong as well: CEO RJ Scaringe said on Friday morning that Rivian had already taken over 68,000 reservations for the R2. (Rivian hasn't yet opened reservations for the R3, which will launch sometime after the R2.)
Rivian also said that it is pausing its plan to build a second factory in Georgia in a bid to save cash and lower the costs of launching the R2 and R3. That was widely seen as a good move, but it points out Rivian's key challenge: Money is tight.
Rivian might need to raise money before the R2 launches
Rivian ended 2023 with about $10.4 billion in cash and available credit lines. That's a lot more than any other EV start-up has on hand -- but launching new models requires a lot of money. And Rivian is still a long way from profitability: It burned almost $6 billion in 2023, though it was able to raise a total of about $2.8 billion in two separate convertible note sales last year.
While most observers (including me) expect that Rivian will be able to raise any additional cash that's needed without too much trouble, big raises would likely cause further dilution to the stock. That in turn would hinder gains for existing investors.
That's why UBS is holding on to that sell rating on Rivian's stock for the time being. But that said, the company's upcoming models look great and demand for the R2 looks strong. That's why the stock has been rising.
