Backed by Amazon (NASDAQ: AMZN) and Ford (NYSE: F), Rivian Automotive (NASDAQ: RIVN) had a blockbuster IPO in late 2021. At its peak, the stock was valued at more than $120 billion, and it is now trading 81% from all-time highs.

In Q3 of 2022, Rivian Automotive produced over 7,000 vehicles, which is a quarterly record for the company. Rivian also confirmed it remains on track to produce 25,000 vehicles in 2022. 

Last year, the electric vehicle manufacturer forecasted to manufacture 50,000 vehicles in 2022. But supply chain disruptions and rising commodity prices led to Rivian’s lower forecast, driving share prices lower. 

Amazon has a 22% stake in Rivian and is expected to order 100,000 delivery vans from the EV manufacturer through 2030. Comparatively, global EV sales might surpass 31 million units by 2030, up from 4.3 million units in 2021, providing enough room to increase top-line growth in the future.

 

Is Rivian stock a buy?

Rivian confirmed its order backlog remains strong. It ended the June quarter with a preorder backlog of 98,000 units for its R1 vehicle in North America. Its average daily preorder rate gained pace in Q2 of 2022, reflecting the broader appeal of the R1 platform. Around 60% of R1T preorder holders have never owned a pickup truck, while 90% of preorder holders do not own an electric vehicle.

Rivian is also investing heavily to expand its ecosystem and launched charging sites that are deployed at state and national parks. It aims to open 3,500 fast chargers at 600 sites along major highways in the United States and Canada. This vertical integration should allow Rivian to improve the user experience and achieve cost efficiencies.

Rivian generated $364 million in sales in Q2 and is on track to end the year with $1.84 billion in revenue. Further, analysts expect the top line to surge to $6.36 billion in 2023. Will these impressive growth rates inspire investor confidence and push RIVN stock prices higher in Q4 of 2022?

 

RIVN stock will remain volatile in the near term

While Rivian continues to grow at a rapid pace, it remains unprofitable. In the June quarter, it reported a negative gross profit of $704 million and is forecast to end the year with an adjusted loss of $6.9 per share.

Rivian explained, “As we produce vehicles at low volumes on production lines designed for higher volumes, we have and will continue to experience negative gross profit related to labor and overhead costs. This dynamic will continue in the near term, but as we have already started to experience, we expect it will improve on a per vehicle basis as production volumes ramp up faster than future labor and overhead cost increases.”

Rivian reported a net loss of $1.71 billion in Q2, compared to a net loss of $580 million in the year-ago period. The wider losses were due to higher operating expenses as the company continued to ramp up production at a fast clip.

Manufacturing EVs is a capital-intensive process, and Rivian may very well report losses for several years. But it ended Q2 with a cash balance of $15 billion, providing it with enough financial flexibility to focus on growth and support a high cash burn rate. 

Tesla (NASDAQ: TSLA) remains the undisputed leader in the EV segment but might continue to lose market share to new and established players such as Rivian, Ford, and General Motors (NYSE: GM).

Analysts remain bullish on the company, and RIVN stock price is trading at a discount of 50% compared to average analyst estimates right now.

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