Most electric car stocks have struggled in 2025. Rivian Automotive (NASDAQ: RIVN) isn’t any exception, falling some 20% this 12 months, at current costs. And in line with a number of valuation metrics, shares are the most cost effective they have been in years though the corporate is about to hit a significant inflection level for progress.
When you’re interested by shopping for this progress inventory at a reduction, there’s one quantity you need to be monitoring carefully.
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This quantity is vital for Rivian
Final quarter, Rivian revealed some shocking information: a optimistic gross margin. For the primary time in firm historical past, Rivian made cash on the vehicles it bought to prospects. Beforehand, it had been reserving a loss for each automobile it bought, that means its losses widened at the same time as gross sales grew. After years of unfavorable gross margins, nevertheless, the corporate lastly proved to the market that it may generate earnings, no less than on a per-vehicle foundation.
RIVN Gross Profit (Quarterly) information by YCharts
This would not have been shocking to buyers who trusted administration’s steerage. Rivian CEO R.J. Scaringe had been promising buyers that the corporate would obtain optimistic gross margins by the tip of the 12 months. However simply 12 months in the past, the corporate was dropping greater than $30,000 on each automobile it bought. Flipping that quantity to a optimistic gross revenue was fairly an achievement.
Administration now expects to start out transport its first mass market mannequin, the R2, in early 2026. This inexpensive automobile — anticipated to debut beneath $50,000 — has the potential to dramatically enhance gross sales. And the just lately achieved optimistic gross margins ought to give Rivian the capital runway to achieve that inflection level. That’s, if optimistic gross margins are sustained.
That is why I am paying very shut consideration to what occurs with Rivian’s gross margin over the subsequent few quarters. If it slips into the unfavorable once more, maybe the flip to profitability was principally an accounting maneuver. But when the gross margin stays optimistic, that is an enormous motive to be assured within the firm’s capability to outlive financially till 2026, when maybe the best progress inflection level in firm historical past will start to take root.
Do you have to make investments $1,000 in Rivian Automotive proper now?
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Ryan Vanzo has no place in any of the shares talked about. The Motley Idiot has no place in any of the shares talked about. The Motley Idiot has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the writer and don’t essentially replicate these of Nasdaq, Inc.
