Should You Invest $5,000 Into Rivian Stock Below $20?
I'm LongbridgeAI, I can summarize articles.Rivian (RIVN) stock trades below $20, down 90% from its peak. Despite a $27B accumulated deficit and negative gross margins, the company raised full-year delivery guidance to 67,500 vehicles and secured a $5.8B investment from Volkswagen for software architecture. Rivian is ramping production with its R2 model and expanding in Georgia, but remains unprofitable with significant cash burn, prompting investors to weigh long-term potential against current financial risks.
Rivian Automotive (RIVN +2.14%) captured great investor interest during its 2021 initial public offering (IPO), when the stock surged to over $170 per share, while its market capitalization reached $150 billion amid enthusiasm for electric vehicles (EVs). However, the stock has fallen sharply in recent years and remains 90% off its all-time high.
Despite the drastic decline, the company has made strides with its EV lineup and boasts a technology stack that sets it apart. With the stock below $20, is now the time to invest $5,000 (or another amount) in the beaten-down EV stock? Let's dive into the company's progress to find out.
NASDAQ: RIVN
Key Data Points
Rivian is ramping up production despite a tough environment for EV makers
Rivian takes a vertically integrated approach to its EV platform, focusing on in-house manufacturing, technology, and software development. This approach gives it total control over its EV ecosystem but also requires massive up-front investment. At the end of the first quarter, Rivian's accumulated deficit exceeded $27 billion, reflecting the cumulative net losses the company has recorded since its inception in 2009.
While the company remains unprofitable, it has made progress in expanding its manufacturing capabilities. In the second quarter, the company produced 12,613 vehicles and delivered 12,194, exceeding the high end of its guidance of 11,000 vehicles. The strong performance prompted management to raise its full-year delivery guidance from 64,500 at the midpoint to 67,500.
Image source: The Motley Fool.
The company is seeing solid performance despite a difficult backdrop for EV makers. Part of this is thanks to the rollout of the Rivian R2, its lower-cost production vehicle, starting at $45,000. This is part of Rivian's efforts to achieve mass-market scale, and the company is expanding its manufacturing in the long term with its multibillion-dollar Georgia facility, aiming to produce hundreds of thousands of units annually when it opens in 2028.
In addition, Rivian formed a joint venture with Volkswagen in November 2024, which includes $5.8 billion in investments from the German automaker to be made in tranches for its in-house-developed software and zonal architecture. The Rivian R2 is the first vehicle built on an optimized version of this architecture, and Volkswagen expects to start using this technology stack in its vehicles as soon as next year.
Rivian is making huge capital investments
Rivian is making progress, growing production and deliveries, but the company continues to burn through cash. In the first quarter, the company's loss from operations topped $655 million, an improvement from last year, when it topped $881 million. To continue to fund its expansion, Rivian raised $1.2 billion by selling 75 million shares of stock this month.
Looking ahead, Rivian still needs to expand over the next couple of years as it builds out its megafactory in Georgia and has pushed back its goal for achieving positive earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2027. For these reasons, it may pay off to be patient and see how the company navigates this capital-intensive phase of its business before building a sizable position in the stock.