Should You Buy Rivian Stock?

Rivian (NASDAQ: RIVN) share prices took a hit after the electric vehicle (EV) maker reported its first-quarter 2024 earnings. While sales were on par with Wall Street expectations, the company incurred larger losses than analysts had predicted. Despite this setback, Rivian’s overall trajectory seems to remain on track.

Rivian, known for its EV trucks and SUVs, also produces delivery vehicles for Amazon and is exploring partnerships for further use of its delivery trucks. The company ramped up production in the first quarter of 2024, manufacturing nearly 14,000 vehicles, a 50% increase from the previous year. Rivian aims to produce around 57,000 vehicles in 2024, maintaining a steady output compared to 2023.

Although Rivian faced challenges in the first quarter, including a planned shutdown to enhance manufacturing capabilities, the company remains optimistic about achieving a modest gross profit by the fourth quarter of 2024. With approximately $7.8 billion in cash and short-term investments, Rivian has the financial resources to support its growth plans.

However, Rivian’s need to turn a gross profit is crucial for its long-term sustainability. The company reported significant losses per vehicle sold in the first quarter, emphasizing the importance of achieving profitability soon. Additionally, Rivian experienced a decline in cash reserves from the end of 2023 to the first quarter of 2024, highlighting the urgency to generate profits.

Investors considering Rivian should weigh the company’s progress against its financial goals and the risks involved. While Rivian shows promise in its growth trajectory, it has yet to prove its business model’s sustainability. Only investors comfortable with the high-risk nature of the automotive industry may find Rivian a suitable investment option.