Rivian Automotive (NASDAQ:RIVN) has certainly been among the worst-performing EV stocks in the market this year, down more than 30% on a year-to-date basis, at the time of writing. This move is one that’s actually improved slightly in recent weeks, following the company’s third-quarter earnings report. Shares of Rivian stock actually headed higher after the company reported a revenue miss ($874 million versus $990 million expected) as well as a wider-than-expected loss of 99 cents per share, versus expectations of a 92 cent per share loss. Guidance was lowered, and many (including myself) would have expected the company’s rout to continue.
However, Rivian’s management team did note that they expect to see a “modest positive gross profit” in Q4, something investors clearly liked to see. This is a company that needs a pathway to profitability. And, with the company’s R2 SUV production set to start next year (followed by the R3), expectations are that this lineup refresh could drive substantial stock gains, if successful.
In other words, there are some catalysts for Rivian investors to consider. And with the stock trading at these lower levels, growth-at-a-reasonable-price investors may start to give Rivian a harder look right now.
Let’s do just that, and see whether the stock’s 15% decline over the past month and more than 50% decline over the past two years is warranted, or if this is a stock that investors should consider. After all, other industry giants such as Volkswagen (OTC:VWAGY) certainly seem to be putting their money where there mouth is in supporting this name.
Key Points About This Article:
- Rivian is among the top electric vehicle maker that’s under pressure from market and company-specific forces right now.
- Here’s what investors interested in this electric truck maker may want to consider, with respect to whether this stock’s dip is worth buying.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
Rivian Isn’t Tesla
Rivian’s management team has acknowledged in the past that they’re not Tesla. In fact, the company’s CEO RJ Scaringe recently emphasized that he didn’t want Rivian to mirror Tesla (NASDAQ:TSLA) at all. Speaking on a high-profile podcast, the senior Rivian executive suggested that Tesla’s dominance in the EV sector is notable, but that Rivian is seeking to garner mass market appeal in a different way that Tesla. Instead of producing a top-tier sports car, the company is choosing to take on a truck and SUV-first model, aiming to capture a larger share in what’s ultimately the biggest combined market in the U.S.
Tesla has actually appeared to have looked to play catch up to Rivian in many respects, with the recently-launched Cybertruck certainly raising eyebrows in the industry. That said, over the long-term, I think Rivian stands a good shot at being the dominant player in the world of light trucks and SUVs, at least for the next few years. Those EV buyers who are looking at sports utility or light truck options in this space are mostly likely considering a Rivian, and that speaks to the company’s intention of becoming the sustainable player in this niche.
Potential Catalysts On the Horizon
Rivian set itself apart from Tesla by initially offering only a pickup truck and a large SUV, avoiding direct competition with Tesla’s Models 3 and Y. This strategy helped Rivian capture market share in segments not yet dominated by electric vehicles. With pickup trucks and SUVs among the top-selling vehicles in the U.S., Rivian is now expanding into even larger consumer markets.
Rivian’s next-generation R2 SUV is set to start production next year, with deliveries expected to start in early 2026. This product line upgrade should broaden the company’s core clientele and expand its total addressable market. However, this expansion won’t be one dimensional, as Rivian expects to also release its R3 crossover in short order, which could generate even more buzz among cost-conscious consumers looking for a viable option in this space. Strong orders for the R2 and successful launches of future models could drive RIVN stock higher, while any signs of weak demand or production issues could be headwinds. In short, we’ll have to see how this planned rollout progresses.
In my view, Rivian is an execution story at this stage of its development. If the stock is going to fly higher as the company gains market share and improves profitability, it’s going to do so as a result of key production and efficiency metrics getting hit. Thus, Rivian’s ability to capitalize on these catalysts really comes down to how the company’s management team can effectively manage the profitability of Rivian’s growth moving forward.
So, Is Rivian a Buy?
Despite Rivian’s stock price plummeting 90% from its peak, the company’s market share gains in the SUV and light truck space are worth noting. If the company’s revamped R2 and new R3 models catch on, this is a stock that could certainly catch fire as losses per vehicle narrow on increased scale. Of course, much of the bullish thesis on RIVN stock is tied to the company’s management team doing what they say they’re going to do on the cost containment front. But if profit margins can increase faster than sales, this is a stock that could have big upside from these lower levels.
I think Volkswagen’s recent investment in Rivian, and the company’s intention on investing in a brand refresh at a time when many other EV players are sitting on their heels, could make RIVN stock one that may be worth legging into. That’s not ignoring the risk behind this name – there’s plenty. But taking a dollar cost averaging approach to a position in RIVN stock seems to me to be a great way for investors to gain exposure to the growth in this particular segment of the EV market.
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