After bottoming out two months back, Rivian Automotive (NASDAQ:RIVN) shares have been creeping back to higher prices. That’s not surprising. A new bull case for Rivian stock appears to be taking shape.
At least, that’s the take-away, from both recent promising developments, and the proliferation of bullish arguments once again for the fledgling EV maker’s shares. Instead of dwelling on current problems, investors are again looking to Rivian’s potentially bright future.
That’s a future that entails Rivian, after an extended slump, finally making progress in areas like delivery volume and profitability.
After years of poor performance due to poor operating performance, we agree that starting to put these problems into the rearview mirror could bring RIVN back toward a full charge.
However, Rivian is still well-within the early stages of this resurgence. With this, it may be too early and too risky, to dive into a position today.
Why Investors are Warming Back Up to Rivian Stock
Interestingly enough, it wasn’t a monthly deliveries report or a quarterly earnings release that drove the “bottoming out” moment for RIVN. Rather, it was news of competitor and former backer Ford (NYSE:F) cutting prices on its electric trucks that sank shares to all-time lows.
Stoking fears about losing competitive ground, not to mention the impact of an EV truck price war on margins, it made sense that confidence in RIVN stock bottomed out at this point. However, since briefly tumbling to single-digit prices, Rivian has surged higher, as the market warms back up to this EV contender.
The company has continued to report disheartening news throughout this time frame. For instance, for the March quarter, Rivian reported worse-than-expected losses. The strongly suggested high cash burn remains an issue, with little sign of improvement thus far. More recently, though, as we mentioned above, the focus has shifted back to Rivian’s future potential.
Chalk this up to various developments. For one, Rivian just unveiled next-generation versions of its existing R1S SUV and R1T truck models. Rumors about the company partnering with Apple (NASDAQ:AAPL) continue to swirl. Investors are also looking ahead to when Rivian’s lower-priced R2 models make their debut.
The Risk of Buying Too Early
Again, recent upward moves with Rivian stock have been slow and steady. It’s not as if shares have aggressively rebounded, and will go parabolic in the near-future. Investors may be interested in locking down a position ahead of a further recovery for this former hot stock.
Still, much suggests that RIVN will retreat once again, irrespective of whether a recovery ultimately continues or not. The next gen unveiling and Apple rumors may pique investor interest, but it’s the last catalyst mentioned that stands to most materially improve Rivian’s fiscal performance.
The launch of lower-priced R2 SUV and truck models could lead to significantly higher sales, and a path to consistent profitability. However, these models aren’t set to launch until the first half of 2026.
In the meantime, high cash burn will continue. Prior third-party forecasts have called for cash burn totaling $4.6 billion this year.
Even if Rivian’s has the cash to absorb these losses, and billions more to boot, what remains in the war chest at year’s end may not be enough to cover billions in additional cash burn during 2025.
Despite management’s touting of cost-saving measures, expect another dilutive capital raise.
The Verdict: ‘Watch and Wait’ for Now
Make no mistake. Rivian isn’t at risk of ending up in a downward spiral like some other high-profile EV upstarts. Unlike, say, Lucid Group (NASDAQ:LCID), there’s still the potential for this contender to go the distance.
But given the long time line to Rivian’s liftoff moment, as well as the strong chances of further shareholder dilution, we remain cautious. Investor sentiment could shift back to bearish, before moving once again to bullish.
The opportunity to enter a long-term position at single-digit prices could reemerge at some point down the road. Now, that’s not to say RIVN is a no-brainer buy if it retests its lows. Assessing the situation at that time will be key.
However, with regards to whether you should buy Rivian stock now, our verdict is that “watch and wait” is instead your best move.
Rivian stock earns a D rating in Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.