Is Rivian Stock a Buy Now?

Rivian Automotive (NASDAQ: RIVN) has been a hot topic in the electric vehicle (EV) market, with its stock price soaring to $180 in its first week of trading after its IPO in November 2021. However, the stock has since fallen 82.25% to its current price of $13.85 per share. As the COVID lockdown investing frenzy died out, Rivian's stock price has struggled, leaving investors wondering if now is the time to buy. Let's dive into Rivian's financial health, production performance, and partnership with Amazon to determine if Rivian stock is a buy now.

Financial Health

Rivian's financial health can be assessed through key metrics such as revenue growth, operating income, and cash burn rate. In 2023, Rivian's revenue was $4.43 billion, an increase of 167.43% compared to the previous year's $1.66 billion. However, Rivian's losses were -$5.43 billion, -19.55% less than in 2022. This indicates that while Rivian's revenue is growing, it is still not yet profitable.

Comparing Rivian to its competitors, Tesla's revenue in 2021 was $53.8 billion, and its net income was $5.5 billion. While Tesla's revenue is much higher than Rivian's, Tesla is also much more established in the EV market. Rivian's revenue growth rate is impressive, but it is still not yet profitable, which is a concern for investors.

Rivian's cash burn rate is also a key metric to consider. In 2023, Rivian burned through $5.43 billion, which is a significant amount of cash. This indicates that Rivian is still in a growth phase and is investing heavily in its business. However, if Rivian cannot generate enough revenue to cover its expenses, it may need to raise more capital, which could dilute shareholder value.



Production and Delivery Performance

Rivian's production and delivery performance have evolved significantly over time, with the company facing initial production hurdles and supply chain challenges. However, it has shown improvement in recent quarters. In 2023, Rivian delivered 51,579 electric vehicles, surpassing market analysts' expectations. In the final quarter of 2023, Rivian reported delivering 14,183 vehicles, its second-highest quarterly delivery volume.

Rivian aims to increase its production capacity and reduce material costs to achieve profitability by 2027. The company plans to introduce its Gen 2 platform by 2026, targeting a 45% reduction in material costs. Additionally, Rivian's partnership with Amazon for 100,000 electric delivery vans is expected to drive future revenue growth.



Partnership with Amazon

Rivian's partnership with Amazon is a significant driver of its revenue growth and stock performance. Amazon has ordered 100,000 electric delivery vans from Rivian, with 20,000 already in operation as of December 30, 2024. This deal is expected to generate substantial revenue for Rivian, as Amazon aims to have all 100,000 vans on the road by 2030. The partnership has been praised by analysts, with Benchmark setting a price target of $18 for Rivian's stock, citing strong industry partnerships and a strong financial position as key drivers for the company's future growth. Rivian's shares jumped over 13% on December 9, 2024, following Benchmark's updated "Buy" rating.

Conclusion

Rivian's stock price has fallen significantly since its IPO, but the company's impressive revenue growth, improving production performance, and strategic partnership with Amazon make a compelling case for buying the stock now. While Rivian is still not yet profitable, its revenue growth rate and cash burn rate indicate that the company is on the right track. As Rivian continues to improve its production capacity, reduce material costs, and expand its partnership with Amazon, investors can expect the company's stock price to rebound. Therefore, Rivian stock is a buy now for investors looking for a long-term growth opportunity in the EV market.