It's been a rough few years for Rivian Automotive (RIVN 0.87%) investors. After debuting to great fanfare in 2021, shares have lost nearly 90% of their value. Right now, compared to other electric vehicle stocks like Tesla and Lucid Group, Rivian stock looks very cheap. And yet the next few years could generate some of the biggest sales growth the company has ever seen.
Could this be your chance to buy an impressive growth stock before the market prices in this growth? Yes, but there is one risk you'll want to monitor.
NASDAQ: RIVN
Key Data Points
The next 3 years will be wild for Rivian
Looking at many traditional valuation metrics, the future isn't bright for Rivian. Shares trade at a heavy discount to peers like Tesla and Lucid Group, at least on a price-to-sales basis. And expected growth for the year ahead is lackluster.
But the numbers in the charts below paint a misleading picture of the company's true prospects. In reality, the next three years will be very exciting for Rivian, even if near-term projections are muted.
TSLA PS Ratio data by YCharts
Rivian's current sales base of roughly $5 billion is dominated by just two models: the R1T and R1S. Both can cost anywhere between $70,000 and $100,000 depending on options.
Thus far, customers seem to love both vehicles. Last year, Consumer Reports conducted a survey asking car owners how likely they would be to purchase another vehicle by the same manufacturer. The survey asked owners of nearly every major brand, electric and conventional. Rivian came out on top, suggesting very high levels of customer satisfaction and loyalty.
Rivian expects to leverage this reputation with the launch of three new vehicles in 2026: the R2, R3, and R3X. All are expected to cost less than $50,000 -- crossing a critical price threshold that will allow Rivian to tap millions of new potential buyers who formerly could not afford its higher-end models. This is why analysts expect just 5% revenue growth this year, but 39% revenue growth next year. Depending on how quickly Rivian ramps up production, we could see even bigger growth in 2027 and 2028.
Three years from now, there's a good chance Rivian becomes a household name, just as Tesla is today. At one point, Tesla was a niche brand owned only by the rich. Today, millions of Teslas are sold every year, the vast majority of which are affordable models like the Model Y and Model 3. Rivian hopes to follow the same trajectory with its new mass market vehicles.
Buying Rivian shares right now locks in a very cheap valuation ahead of this multi-year growth sprint. Just make sure you understand the risks outlined below.
Image source: Getty Images.
Don't buy RIVN stock unless you're prepared for this
Rivian looks like a great investment for those willing to buy and hold for the next three years. But this story is not without risk. Rivian will likely need to raise more funding to scale these vehicle launches, and delays in production timelines could push growth out further than the market is willing to bear, necessitating heavy shareholder dilution.
But the main risk here isn't with the company; it's with the time frame required to see the investment thesis through. The next 12 months will see very few catalysts for the share price. And while the mass market vehicles are expected to debut in 2026, it likely won't be until 2027 that sales scale considerably.
Investors need to remain patient, especially through the heavy volatility that can plague high-growth stocks with minimal near-term catalysts. But if you're willing to maintain diamond hands, the next three years could prove very profitable for Rivian investors.
