Shares of Rivian Automotive(NASDAQ: RIVN) have fallen 90% from their high-water mark. They are down some 30% in 2025. Given those two numbers, it's hard to believe there's anything positive to say about this electric vehicle (EV) company, but there is. While Rivian is definitely a stock meant for more aggressive types, here are three reasons some investors might want to buy it like there's no tomorrow.
1. The mood around Rivian is very negative
Clearly, given the stock price declines, investors do not see Rivian the same way as they did before. That, however, is more a function of the lemming-like nature of investors than anything about Rivian's business right now. Essentially, when Rivian came public investors were enamored with anything related to electric vehicles and the stock price was bid up to unrealistic heights. Now investors shy away from EV stocks, leading to Rivian's massive fall from grace.
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Image source: Rivian.
Only Rivian hasn't been floundering along doing nothing. It is still building out its business and hitting important milestones along the way (more on this below). And it still has around $7.5 billion worth of cash and short-term investments on its balance sheet, with commitments for more from key partners, to help it continue moving its business forward.
While Rivian's goal of building an EV truck from the ground up is audacious, it has achieved a great deal and appears to have the wherewithal to continue its progress for the foreseeable future.
2. Rivian is operating at scale
One of the most important goals Rivian has reached is producing cars at scale. To be fair, the roughly 50,000 a year production level it is hovering around isn't on par with Tesla(NASDAQ: TSLA) or with the legacy automakers. But it still operates a large factory that is running at a high level. The many EV makers that have fallen by the wayside never got to this point. So this achievement shouldn't be overlooked or shortchanged.
That said, it also isn't the end of the road. There is a lot more to be done, and Rivian is still moving forward on its to-do list. In fact, reaching material production scale was the 2023 goal. In 2024, the goal was to update its production line so it could improve its profitability. That really means reduce its losses, but the important fact here is that Rivian did just that, with its net loss in the fourth quarter of 2024 being cut in half relative to its loss in the same stanza of 2023.
3. A gross profit is the first step toward positive earnings
The big reason for the year-over-year improvement in the fourth quarter of 2024 was that Rivian achieved its goal of turning a modest gross profit in the quarter. That just means that the EV maker made more selling its cars that it cost to produce them. It didn't cover its selling, general and administrative (SG&A) or research and development (R&D) expenses, so there's still a long way to go before Rivian is a profitable company. But a gross profit is the first step in the process.
The big goal for 2025 is to turn a modest gross profit for the entire year. Given that there's another factory shutdown planned, for further upgrades, there could be some ups and downs on the gross profit line along the way. For example, it purposefully produced extra cars in the first quarter so it would have cars to sell through the shutdown. If Rivian can achieve its full-year gross profit goal, or even if it just comes close given the market environment, it will be continuing to make the progress it needs to be a sustainably profitable business.
Rivian is achieving great things one step at a time
It takes time to build a car manufacturing company from the ground up. That is what is playing out at Rivian and, while it may not be happening quickly enough for Wall Street, this doesn't mean that important progress isn't being made. Yes, there is a long way to go before the company is sustainably profitable. And, because of that, it is only appropriate for more aggressive investors. But if you have the stomach for it, buying Rivian while investors are so downbeat is a potential chance to get in on the ground floor. Assuming it keeps hitting the goals it lays out, there is a material opportunity for growth ahead.
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Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
