If you were lucky, or perhaps savvy, enough to invest in Rivian (RIVN 0.72%) three months ago, you'd be sitting on a healthy 93% gain. The company recently inked a potentially massive investment by Volkswagen, and topped forecasts for deliveries. Let's dive into these developments and see if the recent surge marks a solid time to buy into the electric vehicle (EV) maker.
Show me the money!
Rivian just landed a deal that Fisker had previously dreamed of before the latter entered bankruptcy. Rivian and Volkswagen entered into a joint venture to create next-generation software-defined vehicle platforms to be used in both companies' EVs.
Volkswagen is putting its money where its mouth is and will invest an initial $1 billion in Rivian, with up to an additional $4 billion planned through 2026. The investment will help support Rivian's production of its R2 electric SUV and a new mid-size electric vehicle to help "secure our capital needs for substantial growth," according to Rivian.
The support this will give Rivian is important, but it will also combine company strengths to lower cost per vehicle, increase scale, and speed up innovation. It's huge news for Rivian that initially sent the stock soaring 50% higher before the gains moderated a bit.
NASDAQ: RIVN
Key Data Points
Topping expectations
One of the biggest drags on Rivian, after it exited 2023 with solid momentum, was that management acknowledged that production and deliveries were expected to remain flat in 2024. That's not the growth story investors had hoped for.
Fortunately, the second quarter brought decent news when Rivian reported deliveries of 13,790 EVs, well ahead of analysts' estimates of 11,510 deliveries. The news gets slightly better when you see that Rivian produced only 9,612 vehicles, meaning the company was able to clear out some inventory.
Is Rivian a buy?
Let's get this out of the way first and foremost: Rivian is burning through massive amounts of cash to grow its business, and it remains a risky stock. Its recent 93% surge doesn't mean it's out of the woods yet, but the driving forces behind those gains are definitely reasons to be optimistic for its future.
The Volkswagen partnership and $5 billion investment is massive for investors, and for a company hoping that its financials and liquidity can remain stable before launching the R2 electric SUV in early 2026. Rivian also completed a refresh of its R1 vehicles and introduced new premium trims and paint packages, and it hopes this will drive demand in the near term.
If you're interested in riding the future wave of EVs, Rivian is arguably the best pure EV start-up (aside from Tesla). And if you can accept the risk of owning a cash-burning start-up, Rivian is certainly a safer bet for investment than it was even three months ago.
