Rivian Automotive (RIVN 0.85%) is expected to announce earnings in early November. If you've been eyeing this electric vehicle stock, now may be a key moment to buy it at a discount. That's because Rivian is about to reach an important growth catalyst. This will perhaps be the biggest in its history. Let's learn what that is and whether now it a good time to invest in the EV maker.
Expect important updates to arrive in early November
What exactly should investors expect to be revealed next month? Most importantly, we should get our clearest update yet on Rivian's upcoming affordable models: The R2, R3, and R3X.
I've written before how important it is for an electric car company to introduce affordable models. A big majority of car buyers are looking to spend less than $50,000 on their next vehicle purchase. And now that U.S. federal tax credits have been eliminated for EV purchases, offering low-cost models is more important than ever.
Right now, Rivian has just two models on the market, both of which can easily cost $100,000 or more with certain options. This high price point dramatically reduces the company's total addressable market. But the upcoming models -- the R2, R3, and R3X -- are all expected to cost less than $50,000, making Rivians accessible to tens of millions of new buyers.
When Tesla introduced its affordable models -- the Model 3 and Model Y -- growth exploded. I expect the same to occur for Rivian. That's great news for investors, since Rivian's revenue growth rates have essentially flatlined over the last 18 months. This has caused the company's price-to-sales ratio to fall to just 3.1. Tesla, for comparison, trades at nearly 17 times sales. If Rivian's new models follow the growth trajectory of Tesla's affordable models, this valuation gap could narrow quickly.
Earlier this year, Rivian management reaffirmed that the R2 would begin production in early 2026 as planned. That was an important update, since the EV manufacturing industry has historically been overly optimistic about production timelines. Last week, hundreds of Rivian R2 test vehicles were spotted on public roads, with the company noting that these vehicles were generating real-world data and validating charging capabilities ahead of launch.
It's possible that the Rivian R2 will begin production before the first earnings announcement of 2026, which should occur sometime next February. If so, that means this upcoming announcement in November could generate clear guidance from management that adds momentum to the stock. But there's one other reason to buy ahead of next month's earnings call.
Image source: Getty Images.
Can Rivian stay profitable without key subsidies?
Unlike Tesla, Rivian has yet to achieve net profitability. But this year, the company did achieve positive gross margins for the first time. This signaled to the market that, long term, the company is capable of producing vehicles at a profit. There's just one problem. A lot of this gross profit was realized through selling automotive regulatory credits -- credits earned from the U.S. government for producing low-emissions vehicles that can essentially be sold at a 100% profit.
In May, for example, Rivian posted a $206 million gross profit. Roughly half of that gross profit, however, included regulatory credit sales. With those credits eliminated for 2026, it will be very interesting to track Rivian's gross profit levels. In August, the company slipped back into negative gross profits.
It's possible that good news on the R2 production front will be offset by a negative update regarding profitability. But if we get positive news on both factors, we could finally see Rivian shares move significantly higher following more than two years of share price stagnation.
