Investing.com -- Bernstein on Wednesday reiterated its Underperform rating and the $6.10 price target on Rivian (NASDAQ:RIVN) shares, implying a 51% downside from the stock’s last closing price of $12.44. The firm cites slower growth, heavy cash burn, and dilution from its Volkswagen (ETR:VOWG_p) joint venture (JV) as key risks.

Even if Rivian successfully launches its R2 and R3 models and refreshes its R1 lineup, Bernstein analysts estimate that adjusted EBITDA break-even will not occur until 2029.

Free cash flow (FCF) break-even is expected in 2030, after burning through $13.8 billion in cash, including financing from Volkswagen and a Department of Energy IRA loan.

The company would “still be sub-scale and will have to work hard to reach our forecasted 15% gross margin level,” analysts led by wrote in a note.

Bernstein said it has faced pushback over its bearish views on Rivian, with investors pointing to the automaker’s potential for higher vehicle sales and software-based revenue.

“Not surprisingly, the potential upside from software sales to other OEMs (via the VW-JV) or consumers (for ADAS functions) could present meaningful upside,” analysts admit. “However, we see the long-term opportunities for all OEMs and suppliers in this area as very limited and Rivian has yet to demonstrate its ability to monetize software beyond its partner VW.”

They warn of major financial pressures, forecasting 2026 EBITDA at 50% below consensus and capital expenditure (capex) between 2026 and 2028 at $4 billion higher than expected.

The firm also sees Rivian’s brand positioning as a limiting factor in an increasingly competitive EV market.

“Without significant volume expansion, Rivian will remain sub-scale and achieve mid-teens gross margins at best - a prospect that makes it challenging to deliver meaningful value to shareholders,” analysts explained.

While the Volkswagen JV eases funding risks, Bernstein estimates it results in 47% dilution for shareholders and limits Rivian’s ability to monetize its software independently.

Some investors argue Rivian could see stronger demand if it follows brands like Jeep or Bronco, but Bernstein is unconvinced, stressing that capacity constraints remain a challenge.

“With break-even years away and mounting risks, we rate Rivian Underperform and set a price target of $6.10,” analysts concluded.

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