JPMorgan downgrades Innoviz stock rating on auto delays

JPMorgan has reduced its rating on Innoviz Technologies (NASDAQ:INVZ) stock from Overweight to Neutral, citing delays in automotive customer programs. The stock price has dropped from $0.22 to $0.18, marking an 88% decline over the past year. This downgrade follows a postponement in the start of production for Volkswagen’s ID. Buzz vehicle, which in turn slows anticipated revenue growth from automotive customers.

The delay puts the company in a more precarious position, as it relies heavily on its defense business for maintaining liquidity. At present, Innoviz is rapidly depleting its cash reserves; however, it maintains a current ratio of 1.73 and has more cash than debt on its balance sheet. Analysts believe the stock is currently undervalued.

The delay is not due to lidar performance but rather continuous delays in automotive commercial contracts. JPMorgan believes that autonomy deployment is moving toward scaled robotaxi platforms, with Tesla's camera-centric architecture gaining prominence alongside emerging operators like Wayve and Nuro. Previously, Mobileye Drive was seen as the most credible catalyst for a significant shipment increase at Innoviz, but limited visibility into timing and scale led to the rating change.

The defense business has not yet generated enough commercial revenue to counterbalance the weaker automotive trajectory. JPMorgan is prepared to reassess its stance once awarded programs enter production, alternative automotive contracts arise, or defense revenue scales up with sustained strong margins. Recently, Innoviz reported third-quarter revenue of $12.1 million, falling short of Wall Street's expectations of $21.33 million.

This revenue shortfall was primarily due to a customer delaying production to 2027 and delaying milestone payments. Despite matching forecasts with an adjusted loss per share of -$0.07, the company has now lowered its full-year outlook. These developments have significantly impacted investors as they assess the company's financial performance.