Should You Buy Rivian Stock While It's Below $15?

Rivian Automotive, Inc. (NASDAQ:RIVN) has been a rollercoaster ride for investors since its initial public offering (IPO) in November 2021. After reaching an all-time high of $172.00 in November 2021, Rivian stock has since plummeted, hitting a low of $11.73 in June 2022. As of writing, Rivian stock is trading below $15, raising the question: should you buy Rivian stock at these levels?

RIVN stock performance (YCharts)


Rivian's production ramp-up and challenges
Rivian's production ramp-up has been slower than expected, with the company missing its 2021 production targets. In 2021, Rivian aimed to produce 1,200 vehicles but only managed to produce 920. However, Rivian has shown improvement in recent quarters. In Q1 2023, Rivian produced 2,553 vehicles, a 172% increase from Q1 2022. In Q2 2023, Rivian produced 13,992 vehicles, a 50% increase from Q1 2023. Despite these improvements, Rivian still faces production challenges, including supply chain issues and manufacturing bottlenecks.

Rivian's Amazon deal and financial stability
Rivian's partnership with Amazon and its contract to deliver 100,000 electric delivery vans (EDVs) by 2030 has significantly contributed to its financial stability and growth potential. This deal provides Rivian with a steady revenue stream, access to Amazon's vast market and distribution network, and enhanced reputation. As of December 31, 2022, Rivian had $13.1 billion in cash and cash equivalents, providing a cushion for its operations and growth initiatives.

Rivian's product pipeline and competition
Rivian's product pipeline, including the R2 and R3 models, positions it well against established competitors and Tesla's mass-market offerings. The R2 and R3 models, expected to have a starting price of under $50,000, will give Rivian access to a significantly larger customer base. However, Rivian will face intense competition from established automakers and Tesla, which has already established itself as a leader in the EV market.

Rivian's cash burn rate and funding sources
Rivian's current cash burn rate is a significant concern for its ability to sustain operations and fund growth initiatives. In 2022, Rivian reported a net loss of $6.75 billion, and it expects to lose $4.3 billion before interest, taxes, depreciation, and amortization (EBITDA) in 2023. Rivian's cash and cash equivalents as of December 31, 2022, were $13.1 billion, which provides a cushion for the company to continue operating and investing in its growth initiatives. However, at the current burn rate, Rivian may run out of cash by 2025, which could lead to a liquidity crisis if it cannot secure additional funding or achieve profitability.

Rivian's potential sources of additional funding include equity financing, debt financing, government incentives, strategic partnerships, and mergers and acquisitions (M&A). These funding sources could influence Rivian's valuation and long-term prospects by providing the company with the capital it needs to expand its production capacity, develop new models, and invest in research and development. However, they could also dilute existing shareholders, increase the company's risk profile, or lead to a change in control.

Should you buy Rivian stock while it's below $15?
Rivian stock's current price below $15 presents an attractive entry point for long-term investors. The company's partnership with Amazon, strong product pipeline, and massive market opportunities underpinning the EV market are conducive for Rivian stock over the long term. However, Rivian's production challenges, cash burn rate, and intense competition in the EV market pose significant risks to the company's growth prospects.

Investors should carefully consider these factors before making a decision. Rivian stock is suitable only for speculative investors with a long-term investing horizon. As such, we reiterate our Buy rating on RIVN stock, but investors should be prepared for volatility along the way and consider dollar-cost averaging when the share price is weak.

RIVN stock consensus price targets Vs. stock performance (TIKR)


In conclusion, Rivian stock's current price below $15 presents an attractive entry point for long-term investors. However, investors should be aware of the risks and challenges facing the company. Rivian's production ramp-up, cash burn rate, and competition in the EV market will be critical factors in determining the company's success. Investors should closely monitor Rivian's progress and remain patient as the company works to overcome these challenges.