Uncovering the Pivotal Single Figure Potentially Fueling Rivian's Stock Growth
Looking for the next big EV stock spark? After Tesla, it's time to check out Rivian (RIVN, down 1.59%). Here's why investors should pay attention to Rivian's Q4 earnings on February 20th:
Unlocking Upside
Tesla has been the game-changer in the electric vehicle (EV) market, distinguishing itself with profitability and potential future ventures like robotaxis and AI. The stock's high price-to-sales (P/S) multiple is a testament to its popularity.
For Rivian to follow in Tesla's footsteps, one key number to watch out for is achieving positive gross profits during the fourth quarter and for full-year 2025. That's the magic formula that will click with investors, reducing the valuation gap with competitors.
While the company has experienced production hiccups and supply chain disruptions, its recent progress in generating better gross profits offers hope. Still, hitting the profitability mark will be a challenging task in such circumstances.
The Q4 earnings could be a turning point for Rivian if it manages to make significant strides in this area. Although the company doesn't anticipate being gross profit-positive in every quarter in 2025, achieving positive gross profits for the full year would be a positive sign, suggesting a long-term vision and potential for growth.
What's the Hiccup?
However, there might be some bumps along the way. The incoming administration might roll back EV industry support, including the federal tax credit on EV purchases of up to $7,500 (Rivian only qualifies for half of that, if at all). This uncertainty will weigh on EV stocks, including Rivian, throughout 2025.
Additionally, 2025 lacks visible catalysts to propel Rivian's stock price higher. Although the company plans to launch the R2, R3, and R3X in 2026, there are no anticipated releases for 2025. Some investors might feel invested in an overly gloomy narrative, causing stock prices to stagnate.
But don't let these challenges deter you from looking into Rivian. The company's enormous potential and a bright future exist if it can drive down costs and steer toward profitability. Q4 earnings could be the stepping stone to realizing that goal. Focus on the company's progress towards achieving a positive gross profit—the one number that could unlock Rivian's growth prospective.
Investors interested in financing Rivian's growth should closely watch its Q4 earnings, as achieving positive gross profits could close the valuation gap with competitors and attract more investors. To further strengthen its financial position, Rivian needs to consider potential impacts of changes in EV industry support and lack of visible catalysts in 2025, and focus on strategies to drive down costs and steer toward profitability.
