Planning to buy Rivian Automotive (RIVN) stock? Read this first

Among one of the top performing and reputable electric vehicle manufacturers in the US, Rivian Automotive (NASDAQ:RIVN) is certainly a top EV stock that many investors remain bullish on. The company’s recent market share growth, its strong branding and contrast with the industry leader adze (NASDAQ:TSLA) positions this company as an EV investor to consider.

That said, Rivian is recent The Q2 2024 earnings report, released on August 6, was a mixed bag. Although the company has met production and delivery expectations, profitability is still nowhere near being achieved. The competitive and volatile EV market has added to the company’s margin challenges. Analysts have noted positive trends in cost reduction and production improvement, but Rivian still needs to optimize internal costs. Strategic initiatives such as the R2 platform were crucial to expanding market appeal.

That said, it’s important to note that RIVN shares recently got a boost from news of a potential joint venture with Volkswagen (OTC:VWAGY), which plans to invest up to $5 billion in the early-stage electric vehicle maker. However, the positive impact on Rivian’s stock may be overstated given the ongoing losses and recent executive resignations.

Given the mixed financial signals and high expectations, it was advisable to maintain a neutral stance on Rivian stock before assessing post-earnings performance. While investors are excited, caution is likely warranted with this particular EV stock, especially given the potential impact of the upcoming US presidential election on the sector as a whole.

Key points about this article:

• Rivian remains a top EV stock that many investors are paying increasing attention to, and for good reason.
• Mixed earnings results and an unclear path to profitability make this automaker one that investors should take a cautious approach to right now.
• If you are looking for action with huge potential, be sure to grab a free copy of ours brand new “Next NVIDIA” report.. It has a software stock where we are sure it has 10x potential.

Disappointing fundamentals

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In Q2 2024Rivian produced 9,612 vehicles and delivered 13,790, remaining on track to reach its annual target of 57,000. The recent plant upgrades could certainly help the company to increase efficiency and reduce costs. But Rivian continues to face profitability issues, with earnings per share once again negative at -$1.19. Revenue rose 2.87 percent year-over-year to $1.15 billion, but Rivian’s losses widened to $1.46 billion from $1.2 billion a year ago. year. This was partly due to the company selling off older inventory before the recent cost cuts.

Analyst estimates for EPS and revenue showed significant downward revisions, reflecting the uncertainty. Rivian’s earnings were mixed with some hits and misses, contributing to a cautious outlook ahead of the earnings report.

Rivian’s production fell slightly, delivering only 9,612 units thanks to the second-generation models. However, the company maintained an annual target of 57,000. The quarter highlighted investor concerns as Rivian must demonstrate increased production, profitability and adaptability in the competitive electric vehicle market.

Rivian and Apple

Apple logo on a building in Paris

Rivian has bypassed CarPlay in its electric vehicles, instead releasing a software update for the Built-in Apple Music with spatial sound. Rivian CEO RJ Scaringe explained that CarPlay restricts the automaker’s control, prompting this alternative. Accessing features in Rivian’s Android-based infotainment requires a Connect Plus subscription.

Rivian has announced that all R1T and R1S owners will soon need the Connect Plus subscription to stream media apps and use the built-in Wi-Fi hotspot. Generation 1 owners previously had access to apps like Spotify at no extra charge, but now all will need Connect Plus, which costs $14.99 monthly or $149.99 annually. To ease the transition, Rivian offers a two-month free trial. The update includes apps like YouTube and Google Cast. Rivian is clearly following in Tesla’s footsteps, looking to create passive income streams through paid connectivity subscriptions.

Neither Rivian nor Tesla offer CarPlay or Android Auto, which mirror phone screens on the car’s display. However, RivianTrackr reports that native media apps will work through a separate Wi-Fi hotspot, or users can connect audio via Bluetooth for a basic alternative.

Volkswagen is betting on the future of Rivian

A Volkswagen Golf vehicle in a car lot

With Rivian’s software support, Volkswagen’s electric Golf can launch earlier than expecteddespite the subsequent delays of the Trinity EV. Originally billed as Volkswagen’s answer to Tesla, production of the Trinity EV has been pushed back to 2032, well past its original 2026 target.

Volkswagen’s Trinity EV, originally slated for a 2026 launch, has it was postponed several timeswhich will now debut by the end of 2032. The Trinity was to be VW’s first EV to use the Scalable Systems Platform (SSP), but slowing EV sales and cost-cutting plans under CEO Oliver Blume caused delays. The electric Golf could now become the first SSP-based EV, surpassing the Trinity.

Rivian has also announced a collaboration with Volkswagen where it invested $5 billion in Rivianwith $3 billion to the company and $2 billion to its joint venture. Volkswagen’s MB platform will also be upgraded in 2026, while its PPE platform will receive a software update. The Golf EV, potentially the first model on the SSP platform, could debut by 2029. VW’s CTO has confirmed work on the electric Golf, ensuring it remains affordable and true to its iconic design, with a GTI version planned.

Approach RIVN stock with caution

A Rivian R2 mid-size SUV

Rivian ranked fifth in US electric vehicle sales in Q1 2024making it a top EV stock in its own right and one definitely worth a look. That said, upon a deeper look, there are reasons for investors and analysts to be skeptical of the company’s prospects. Despite cost-cutting initiatives and impressive safety awards, profitability remains a challenge. The 2026 R2 platform, a $45,000 SUV, targets broader markets and aims to save $2.25 billion.

Although still smaller than its rivals, Rivian performed better in 2023. Market analysts expect revenue to grow at a CAGR of 29% through 2026. Despite concerns about cash burn, Rivian’s partnership with Volkswagen offers hope. That said, for long-term investors looking to own a profitable company (or one with a clear path to profitability), avoiding Rivian until the company can demonstrate such progress may be the right move.

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