2 hot stocks down 45% to buy right now

If you have money to invest but think there are no bargains right now as stock indexes hit all-time highs, wait until you hear about the stocks that missed the rally and look set to bounce back. Two perfect examples are Rivian Automotive (RIVN -10.95%) and Nope (NO -2.22%) — both stocks are down 45% so far in 2024.

Although global demand for electric vehicles (EVs) continues to grow, the industry has faced several headwinds, including declining subsidies, high interest rates and growing competition from China. Additionally, companies like Rivian and Nio have had their own set of challenges, all of which combined to drive down their stock prices.

The good news is that both EV makers now appear to be at an inflection point, with strong catalysts ahead that could send their shares higher. Here’s why now is the time to buy these two stocks.

Nio’s Tesla challenger is a must-watch

Neha Chamaria (No): Nio is a prominent manufacturer of luxury electric vehicles in China, which gives the company an advantage over US automakers trying to carve out a foothold in the world’s largest electric vehicle market. However, a price war earlier this year crippled China’s electric vehicle industry, forcing most companies, including Nio, to offer discounts and cut prices on their electric vehicles to survive.

The timing couldn’t have been worse for Nio as it was updating its models to a new platform and was already facing low production and deliveries. Nio’s margins have fallen, and the stock is down more than 50% in the first half of 2024.

Nio’s latest numbers, however, offer a glimmer of hope. With the upgrades behind the company, Nio shipments rose 91% sequentially to 57,373 units in the second quarter. In Q2, Nio’s vehicle sales grew 81% sequentially to approximately $2.2 billion, vehicle margin increased to 12.2% from 9.2% in Q1, and net loss narrowed slightly from Q1 to approximately USD 694 million.

With Nio’s shipments and margins expected to stabilize, its stock should see more upside than downside from here. The company aims to deliver 61,000-63,000 electric vehicles in the third quarter and increase its margin to 15% by the end of the year.

Nio is also tapping into the mainstream electric vehicle market with its Onvo sub-brand and is expected to begin deliveries of the first model under the L60 SUV brand later this month. The L60 will challenge the EV leader adzeHot selling model Y in China with lower price and more features.

Onvo is the most exciting development at Nio right now, and if the L60 catches the eye of EV enthusiasts, Nio stock could find a solid catalyst in the coming months.

A period of transition for Rivian

Howard Smith (Rivian): Many electric vehicle companies have had problems this year. With interest rates at the peak of the current cycle and increased competition, sales growth has slowed for many and disappeared for some. That has sent Rivian shares down 45% this year.

But the company is at a turning point in its business, and that could make the stock’s sharp decline a good long-term opportunity for some investors. You’ll need a strong appetite for risk to invest in Rivian, but let’s see what could go right in the near future.

Rivian has already evolved and improved its EV technology with the second generation of the all-electric consumer pickup truck and SUV. But the R1T and R1S remain niche products that generally only appeal to high-net-worth EV buyers. Based on Q2 revenue, excluding regulatory credits, the nearly 13,800 vehicles Rivian delivered in the quarter each sold for an average of nearly $83,000.

Rivian is approaching a more affordable all-electric SUV. Its R2 model is scheduled to begin shipping in early 2026 with a starting price of $45,000. Importantly for investors, the company should also have enough capital to get to the point where R2 starts bringing in revenue, as Rivian has announced a new partnership with the global automaker. Volkswagen which included a large inflow of capital.

Volkswagen will first invest $1 billion in Rivian in the form of a convertible bond, with the intention of eventually converting it into Rivian common stock. The German automaker may add another $4 billion that would be used to acquire more Rivian shares and form a joint venture (JV) to share EV technology development.

The formation of the JV is expected before the end of this year. This could be a catalyst for investors to gain interest in buying Rivian shares as it prepares to begin production of the R2 SUV. Now may be the time to add shares before future catalysts take hold.