Rivian (NASDAQ:RIVN) shares are trending lower in Friday's session even after the company delivered a stronger-than-expected Q2 report, boosted by narrowing losses and improving sales.

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The EV maker reported revenue of $1.66 billion, up 27.7% year-over-year and $90 million above expectations. Its Q2 GAAP loss came in at $0.63 per share, beating estimates by $0.15.

Rivian also raised its 2026 vehicle delivery outlook, now expecting to sell between 65,000 and 70,000 vehicles, compared with its previous forecast of 62,000 to 67,000.

The company reduced its adjusted EBITDA loss forecast to between $1.8 billion and $2 billion, down from its earlier estimate of $1.8 billion to $2.1 billion. It also lowered its capital expenditure guide to $1.7 billion to $1.8 billion, compared with the previous range of $1.95 billion to $2.05 billion.

However, Rivian's rising cash burn appears to be weighing on the shares. The company burned through $487 million in operating cash during the quarter, compared with generating $64 million in the same period a year earlier. This pushed free cash flow deeper into negative territory, reaching $849 million vs. a negative $398 million in 2Q25.

Nevertheless, for Canaccord analyst George Gianarikas, the quarterly numbers offered a "brief, welcome sunbeam."

The analyst noted that Rivian's 2026 EBITDA and capex guidance moved in a positive direction. However, he cautioned that profitability was helped by $108 million in regulatory credits during the second quarter, along with an IEEPA tariff refund receivable.

While Rivian is making progress, sustainable gross margin profitability remains slightly out of reach. Gianarikas expects the second half of 2026 to face additional costs as the company ramps production of its R2 vehicle. However, if production proceeds smoothly and demand remains healthy, 2027 could mark the point when gross margins "break through and should stay sustainably positive."

In fact, while plenty still needs to go right for Rivian, Gianarikas believes this "may well be Rivian's hour."

The analyst said the R2 has received widespread praise and arrived at an especially favorable time. Higher gasoline prices are "casting a fresh glow" on domestic EVs, while traditional automakers are slowing their EV efforts and smaller competitors are struggling.

Demand for the R2 has also been encouraging. CEO RJ Scaringe said on the earnings call that conversion rates from reservation holders are "meaningfully higher" than expected, which Gianarikas viewed as a positive sign given the limited R2 configurations currently available compared with the wider range of options expected in the future. "As new variations roll out in the coming months and quarters, the ticket to ride only gets cheaper," Gianarikas said.

Gianarikas believes that Rivian previously tried to pursue too many projects at once, including trucks, SUVs, and delivery vans – an "alphabet soup of ambition." He thinks the company's current strategy of focusing on one model and gradually expanding its lineup is a simpler and smarter approach.

The analyst also addressed ongoing online concerns about Rivian's build quality. While he said social media discussions should be viewed cautiously because they can amplify isolated complaints, he believes the issue deserves attention because the R2 is "not merely another vehicle."

"It is a bet-the-company proposition," says Gianarikas. "On a ledge that narrow, the margin for error approaches zero."

Gianarikas, however, seems confident that the company will overcome its challenges, believing that with the R2, Rivian has "caught lightning in a bottle." As such, the analyst reiterated a Buy rating on the shares, while his $22 price target suggests the stock will gain 36% over the one-year timeframe. (To watch Gianarikas' track record, click here)

Seven other analysts join Gianarikas in the bull camp, although an additional 7 Holds and 4 Sells add up to a Hold consensus rating. At $18.26, the average price target points toward 12-month returns of 13%. (See RIVN stock forecast)