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RIVN Stock Analysis: Is Rivian a Buy? Here Is Must-Have Insight for EV Investors.

Rivian (NASDAQ:RIVN) investors have pinned their hopes on this company’s ability to achieve positive gross margins by late 2024, a rarity in the early-stage EV space. Despite a monumental IPO, Rivian continues to face significant challenges in establishing itself as an EV industry leader. While EV adoption is projected to soar over time, Rivian’s ability to capitalize on this trend remains uncertain. This is an important consideration as part of my RIVN stock analysis.

Let’s evaluate Rivian’s trajectory and some of the key factors investors should consider concerning if this EV stock is worth putting into the portfolio. After all, there’s now plenty of competition in the EV space. But for those looking at the light truck and SUV space, this is a stock that remains a prominent player.

Let’s dive in!

R1T Goes Overseas

Rivian’s neon green R1T pickup offers versatility beyond roads, catering to adventure seekers. Australia’s EV mining firm, MEVCO, recently added the R1T to its fleet, attempting to electrify its mining operations in 2024. (That’s a catalyst I like to see).

Rivian’s growth profile won’t be completely determined by the U.S. market, though that is where the majority of the company’s trucks are currently sold. With the R1T heading into new markets and sectors, additional major orders from key corporate clients could boost the company’s profile further.

Overall, for investors considering whether Rivian can grow into its valuation, I think international expansion will be key to the story. We’ll have to see how this partnership plays out, but it’s something I’m keeping a close eye on now.

R2 Will Debut on March

Rivian’s upcoming R2 electric off-roader, priced below the R1T and R1S, is another key catalyst for investors to pay attention to. In my view, this move signals a shift toward broader market appeal. Scheduled for a March 2024 debut, the R2 promises simpler features and likely multiple variants, including a crossover and pickup, emphasizing outdoor prowess.

The R2’s design may echo cues from the R1 series, though the extent of similarity remains uncertain. A sneak peek seems to suggest the company’s R2S will resemble the R1S, with a boxy shape. More details on the R2 lineup are forthcoming, with production slated for 2025, targeting broader market appeal.

The Bullish Outlook

Rivian faces two potential trajectories in the next three years: achieving profitability through scaled-up production, and reduced expenses over time. Despite production challenges, Rivian has made notable production strides, exemplified by its 2023 output of 57,232 vehicles. This is a key part of my RIVN stock analysis.

The company’s increased production has led to reduced losses. The company’s third quarter of 2022 showed a loss of $1.7 billion, which was equivalent to a loss of $140,000 per unit sold. Now, the estimated loss per vehicle is approximately $30,000 per vehicle. That’s still a long way from profitability, but it’s certainly a step in the right direction. Importantly, revenue is also at an all-time high, with promising catalysts ahead, including a new battery pack slated for 2024.

Rivian’s improved results are due in part to the construction of its expansive Atlanta factory, set to expand total output by 200,000 units by 2026. With big operating profits projected for 2030, Rivian is certainly a stock to consider, if it can execute in the coming years.

The Bearish Outlook

Despite positive production trends, Rivian’s current financial situation poses a challenge. Costs remain high and profitability remains elusive, leading to significant cash depletion. Despite a robust IPO, the company’s reserves have dwindled, raising concerns about its long-term viability.

The significance of the new factory heightens these constraints and could lead to an additional capital raise. Now’s not a great time to raise debt or equity for that matter, providing key risks to long-term investors wary of capital-intensive businesses.

Additionally, analyst projections suggest a slowdown in EV sales growth amid macroeconomic headwinds. All in all, the bear case for Rivian is easy to spell out.

It’s Best to Wait for Now

Rivian’s success in the EV industry isn’t guaranteed. The coming years will test its mettle, determining whether it’s a genuine competitor or merely a hopeful. The company’s upcoming Q4 earnings report on Feb. 21 will offer insight, but Rivian’s future remains uncertain.

I think this stock is one that long-term investors can view as a speculative buy. There are a lot of growth catalysts with Rivian, and the positives probably outweigh the negatives, for those who think the EV space will move well beyond cars toward the trucks and SUVs Americans love to drive. This concludes my RIVN stock analysis.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.

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