Rivian’s Resilience: Can It Bounce Back After Major Losses?

Shares of Rivian Automotive (NASDAQ: RIVN) have seen a dramatic decline of over 90% from their record highs in late 2021. This sharp drop raises questions about the confidence investors have in the company. Is this skepticism warranted?

It’s possible that investors initially overshot their enthusiasm for electric vehicle (EV) stocks, sending Rivian’s shares to inflated levels. Currently, with the stock trading around $12 per share, there could be an opportunity for those who recognize the positive signals emerging from the company.

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Here’s what you should consider when evaluating Rivian today.

Rivian Achieved Key Milestones

Investors should seek companies that fulfill their commitments. In 2024, Rivian aimed to generate a modest gross profit in the fourth quarter and succeeded, posting a gross profit of $170 million. This achievement followed a significant overhaul of its production facility, another objective that the company completed successfully.

Image source: Getty Images.

However, the production overhaul was not without challenges. Following the upgrade, Rivian encountered shortages of key EV parts. As a result, the company had to pivot, focusing production on delivery vehicles, where parts were available. This shift was aided by the ongoing partnership with Amazon, which procures delivery trucks from Rivian.

Ultimately, the fourth quarter proved beneficial for Rivian, showcasing its ability to meet targets despite operational issues. However, the overall financial picture for 2024 remains mixed, with a total gross profit of negative $1.2 million for the year. The company reported losses of $743 million for the quarter and $4.7 billion for the year.

Rivian’s Progress and Future Outlook

Despite the losses, Rivian’s financial performance is showing improvement. The 2024 loss of $4.7 billion reflects a $690 million reduction from the $5.4 billion loss in 2023. This trend indicates that Rivian is heading in the right direction, even as it works toward profitability.

Looking ahead to 2025, the company expects flat production goals and aims to maintain the modest profit achieved in the fourth quarter of 2024. While stability is sought, Rivian is also committed to expanding its business.

RIVN data by YCharts

A key focus for Rivian is increasing delivery truck sales beyond Amazon. The growth in truck production and deliveries means that Amazon may require fewer trucks moving forward. Nevertheless, Rivian’s successful partnership with Amazon serves as a strong selling proposition with potential new customers.

In addition, Rivian strengthened its partnership with Volkswagen in 2024. This collaboration is promising in two ways: it positions Volkswagen as a key customer for Rivian’s EV technology and provides necessary cash flow to support Rivian’s operations. Additionally, grants from the U.S. government have contributed positively to Rivian’s capital resources.

At the end of 2024, Rivian’s cash and short-term investments dropped from roughly $9.4 billion to $7.7 billion. These cash improvements are crucial for the company’s long-term viability.

Is Rivian a Long-Term Investment Opportunity?

Investing in Rivian is not for the risk-averse. As a startup in a competitive EV market dominated by established players, the company is still navigating significant losses. However, Rivian is steadily meeting its operational goals, and if it continues on this trajectory, it could emerge as a serious competitor in the EV industry and achieve profitability over time.

While a cautious outlook is advisable, potential investors might find worthwhile growth opportunities as Rivian advances toward positive financial results.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, serves on The Motley Fool’s board of directors. Reuben Gregg Brewer has no holdings in the stocks mentioned. The Motley Fool has positions in and recommends Amazon and Volkswagen Ag. The Motley Fool maintains a disclosure policy.

The views and opinions expressed herein represent those of the author and do not necessarily reflect those of Nasdaq, Inc.