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Rivian Automotive is building an electric vehicle startup from scratch.
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Its focus is on improving its profitability as it can propose lower cost models.
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The company's latest guidance highlights that the business is still in its early stages.
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10 Better Stocks than Rivian Automotive›
Rivian Automobile (Nasdaq: Riven) is an electric vehicle startup trying to use new technologies to break into mature and competitive industries. It was a difficult task, but it has been completed before Tesla It shows that it is indeed possible.
But, as many new electric vehicle (EV) companies have done it, it is also possible that Rivian will not be able to achieve its goals. So, the biggest question is: Are stocks worth buying now?
Rivian is an industrial business built around manufacturing highly complex and expensive products. Creating such a business from scratch is time consuming and very expensive, which helps explain why Rivian's bloody red ink today. There is a high probability that the losses will continue to be released in the coming years. If you are a conservative investor, you may want to avoid Rivian stock.
Image source: Getty Images.
But, here is an interesting twist. Tesla basically created the electric car space, proving to established automakers the real business of a niche that was previously considered an enthusiast. Tesla brings new technology that destroys old ways of doing things. Rivian also tried to break into the automotive industry by taking Tesla's high-bulb steak.
Like Tesla, Rivian started using the premium model. Like Tesla, it is now working to provide low-priced options for the mass market. The company has shifted from focusing on increasing volumes to focusing on profitability. And it has made great progress, and his goal is to generate moderate gross profit in the last quarter of 2024. It repeated the feat in the first quarter of 2025 but fell in the second quarter of this year.
Gross profit is different from generating positive returns. The gross profit only means that Rivian sells the price of each car that exceeds the production cost of the car. Other costs in the income statement will be further reduced, which will continue to prevent them from entering Black people.
The company is a startup, so it can be expected. What matters is that it meets its internal goals and so far it has done well. This success allows Rivian to work with such industry-leading companies public and Amazon and attract sufficient growth capital.
The story continues
But changes in government agencies in Washington have changed the competitive environment. Once the government's support for electric vehicles has become less and less. Rivian has updated its full-year earnings forecast for interest, taxes, depreciation and amortization (EBITDA). That's not very good, but it's something that happens from time to time.
The company continues to focus on what it can control and is now executing. The next big goal is to launch a model that may be cheaper in 2026, which will help it attract mass market customers.
Basically, Rivian has a lot of cash (over $7 billion) on its balance sheet to support its business and is growing steadily in the process of building it. This is not a low-risk investment, but it is still worth a look for more aggressive investors. If Rivian can even achieve half the success, the future may be very bright for stocks.
While some of Rivian's upstart electric vehicle counterparts are in trouble, it continues to move forward. The company's execution is very good, which shows that positive results seem increasingly likely.
But it's still a money-making startup, so there's always the risk that also falls on the road – which is why only aggressive long-term investors can do research on it. The rise can be huge, but if you buy a company that is still in the early stages of development, you need to understand the risks you are taking.
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Reuben Gregg Brewer has no position in any of the stocks mentioned. Motley fool has a place and recommends Amazon and Tesla. Motley Fool has a disclosure policy.
Are you buying Rivian Stock now? Originally published by Motley Fool