Electric vehicle (EV) maker Rivian (RIVN 2.88%) has proven to be a painful investment for most people who have owned the stock: Its shares today trade 93% below the all-time high of around $172 they hit in November 2021, just days after the company went public. To be fair, however, the stock was relatively overvalued at the time. And some investors may be looking at its now much cheaper valuation as an opportunity.
The next 12 months will present significant opportunities for Rivian as it rolls out its new R2 SUV and R3 crossover models. The arrival of those lower-priced mass-market EVs will expand its ability to capture some market share from embattled EV powerhouse Tesla. But will the company ever be able to staunch its relentless outflows of cash?
NASDAQ: RIVN
Key Data Points
Chaos could create opportunities for Rivian
2025 has been a tumultuous year for the automotive industry and the U.S. economy as a whole. So far, one of the biggest losers has been Tesla, which saw its first-quarter deliveries drop 13% year over year, due in large part to backlash against the actions of CEO Elon Musk in Washington. Rivian can capitalize on Tesla's damaged brand to win over consumers who still want to buy an electric vehicle, but don't want to put money in Musk's pocket.
Rivian may also benefit from the 25% tariffs on vehicles and auto parts imports imposed by President Donald Trump, as well as his wider tariff platform. The EV maker boasts a highly U.S.-centric supply chain -- its motors and batteries are built domestically, and all its vehicles are assembled in Normal, Illinois. This gives the company an advantage over rivals like Ford Motor, which manufactures the electric Mustang Mach-E crossover in Mexico.
That said, Rivian won't be entirely immune to tariff-related fallout. Like all automakers, it relies on a complex international supply chain for sourcing electronic components and core materials such as steel and aluminum, which now face significantly higher import taxes. This could erode gross margins across the U.S. auto industry. And as a small and still unprofitable company, Rivian will be less able to absorb those higher costs than its larger rivals.
Operations are improving, but they still face challenges
Rivian's fourth-quarter results were a mixed bag. The good news was that total revenue jumped 32% year over year to $1.73 billion, driven by a spike in sales. Its operating losses dropped 58% to $661 million. While that was still a massive loss for a company of Rivian's size, things are moving in the right direction, and it now has a pathway to profitability and positive cash flow if it can continue scaling up its business model while keeping costs under control.
Image source: Getty Images.
But success is far from guaranteed. Investors won't get to see Rivian's first-quarter earnings until early May, but its early production and delivery reports for the period were disappointing: It delivered a total of just 8,640 R1T and R1S vehicles in the quarter, 36% fewer than in the prior-year period.
Rivian may have reached the limits of consumer demand for its high-end EV trucks and SUVs, which face intense competition from alternatives like General Motors' Cadillac Lyriq and Tesla's Cybertruck -- both of which also experienced softening demand in the first quarter. However, Rivian will widen its scope beyond the weakening luxury vehicle segment when it starts delivering its new mid-sized electric SUV, the R2, in late 2025. The R2 is expected to start at just $45,000 compared to the full-sized R1S, which starts at around $78,000.
What could the next year have in store for Rivian stock?
The core factors that drive a stock's performance can be boiled down to the company's current profitability and its potential to generate future profits. Rivian's stock has declined so much because investors have become uncertain that it will ever transition to a sustainable business model and stop burning through cash.
Over the next year, Rivian could change the narrative with a successful roll-out of its new, more affordable SUVs. It should have a solid chance of capturing some mass-market demand, particularly if Trump's tariffs on imports give its U.S.-manufactured vehicles more of a price advantage. These potential catalysts are far from guaranteed to materialize though, so investors may want to wait for more information before they consider opening a position in the stock.
