Rivian Automotive builds an electric vehicle start-up from zero.
It focuses on improving its profitability because it works to bring out a model at a lower cost.
The latest company guidelines stress that the company is still in the early stages.
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Rivian Automotive(Nasdaq: Rivn) is a start-up of electric vehicles trying to use new technologies as a means of entering a mature and highly competitive industry. It is a major challenge, but it has already been done, with Tesla showing that it is indeed possible.
But it is also possible that Rivian can fail his goal, as did many electric vehicle companies (EV). So, the big question is: is the stock worth buying now?
Basically, Rivian is an industrial company built around the manufacture of very complex and expensive products. Creating such a company from zero is very long and very expensive, which helps to explain why Rivian is bleeding from red ink today. And it is very likely to continue to publish losses for the years to come. If you are a conservative investor, you will probably want to avoid Rivian shares.
Image source: Getty Images.
However, there is an interesting turn here. Tesla has essentially created the EV space, proving to established car manufacturers that there was a real company in what had previously been considered a passionate niche. Tesla has brought new technologies that disturbed the old way of doing things. Rivian is trying to ride on Tesla’s coatting tails to also enter the automotive industry.
Like Tesla, Rivian started with a high -end model. And like Tesla, he now works to bring out an option to be cheaper for the mass market. The company has gone from the concentration of the increase in the volume to the accent placed on the realization of a profit. And he made strong progress, after achieving his goal of generating a modest gross benefit in the last quarter of 2024. He repeated the feat in the first quarter of 2025, but failed in the second quarter of the year.
A gross profit is not the same as the production of positive income. A gross profit simply means that Rivian has sold each car for more than the cost of the car to be produced. There are other costs further in the income statement which will continue to prevent it from entering the dark.
The company is a start-up, therefore to be expected. What is important is that he achieves his internal objectives and, so far, he has done a good job of this. And this success has enabled Rivian to associate with advanced companies Volkswagen And Amazon and attract ample growth capital.
But the change of administration in Washington has moved the rules of the game. The support of the government once generous to electric vehicles has become less. And Rivian has updated his forecasts in full year for profits before interest, taxes, damping and damping (EBITDA) in a downward direction. It’s not good, but it’s the kind of thing that happens from time to time.
The company continues to focus on what it can control, which is currently execution. The next big goal is to bring out a cheaper model, probably in 2026, which will help him reach the customers of the general public.
Basically, Rivian has a lot of money on his record (more than $ 7 billion) to support his business and makes regular progress when the company was created. It is not a low risk investment, but for more aggressive investors, it could still be worth it. If Rivian can reach half of Tesla’s success, the future could be very brilliant for the stock.
Although some of Rivian’s peers from Rivian fell on the edge of the road, he continues to move forward. The execution of the company was very good, which suggests that a positive result seems more and more possible.
But it is always a start -up that loses money, so there is always the risk that this is also on the edge of the road – that’s why only long -term aggressive investors should look at it. The advantage could be enormous, but you must understand the risks you take if you buy a company that is still in the early stages of its development.
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Reuben Gregg Brewer has no position in the actions mentioned. The Motley Fool has positions and recommends Amazon and Tesla. The Motley Fool has a policy of disclosure.
Is Rivian Stock a purchase now? was initially published by the Motley Fool
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