The Rocky Road of Rivian’s Stock
Investors who leaped at Rivian Automotive‘s (NASDAQ: RIVN) initial public offering were met with a harsh reality as the stock price plummeted almost 60% from its yearly high. This nosedive becomes even more staggering when considering that Rivian shares are down over 90% from the euphoric post-IPO surge in late 2021.
Pause for a moment. Imagine this – a 90% plunge signifies the near annihilation of Rivian’s stock value. A $1,000 investment at the IPO would now be a mere $100. Such drastic declines don’t occur without purpose. Rivian’s predicament stems from waning electric vehicle fervor and investor skepticism towards its financial performance.
The End of the Great Tesla Hunt
As electric vehicle trailblazer Tesla edged closer to sustainable profitability, investors sought emulating ventures for astronomical stock gains, leading many to anticipate Rivian. Admittedly, Rivian, renowned for its high-quality electric trucks, achieved substantial production scale-up to nearly 60,000 vehicles annually in a remarkably brief time.
A more detailed look at the situation reveals incurring a loss of approximately $39,000 per vehicle in the first quarter of 2024. Nonetheless, vital improvements are underway to enhance profitability. With a plant upgrade completed, Rivian expects to turn a modest gross profit by the fourth quarter of 2024.
Rivian’s Imperative Path to Profitability
Crucial to Rivian’s trajectory is achieving profitability in truck sales. The company’s intention to introduce a more affordable model in the future is pivotal. However, this transition will likely take a few years, necessitating caution. Thus, only daring investors should consider Rivian amidst the extensive stock price slump.
The Road Ahead for Rivian
Rivian has achieved notable progress and upholds a compelling product line. Yet, sustaining a profitable enterprise remains elusive. Executing proficiently, namely achieving a gross profit by year-end and launching an affordable model, constitutes Rivian’s winning strategy. For most investors, evaluating Rivian after the fourth-quarter results – and ideally the lower-cost model launch – is prudent.
Ultimately, the present does not appear conducive for investing in Rivian unless embracing substantial risk.