Rivian’s Struggle and Potential
Rivian Automotive (NASDAQ: RIVN) has been one of the top U.S. EV stocks that have underperformed in recent years, losing more than 90% of its value since its IPO. Despite this, the company has a strong brand and growing market share in the EV space, which could lead to a brighter future outlook.
Volkswagen Investment and New Models
One of the key positives for Rivian is the $5 billion investment from Volkswagen (OTCMKTS: VWAGY). This investment not only provides a significant influx of capital but also opens up opportunities for collaboration and growth in the European market. Additionally, Rivian is launching new models, including the R2, which has generated positive sentiment with its distinctive design and more headroom compared to Tesla’s Model Y.
Cost-Cutting Measures and Earnings Expectations
Rivian’s cost-cutting measures could be a key factor in its upcoming earnings report, which is set to be released after market close on August 6. If the company can deliver an earnings beat, it could be a significant catalyst for the stock. Truist Securities has raised its price target to $16 per share for RIVN stock, citing that recent declines are largely due to market-specific trends.
Growing EV Market
Despite concerns about the overall market, U.S. EV sales grew 11.3% year-over-year in Q2, reaching 330,463 units. Rivian’s CEO, RJ Scaringe, has noted that there is still limited mid-sized SUV choices in the market, providing an opportunity for the company to gain market share. Furthermore, German authorities have approved Rivian’s joint venture with Volkswagen, citing no competition issues, which could lead to significant growth in the European market.
Risks and Near-Term Outlook
However, it’s a tough market out there, and if all the recession signals that are bright red right now do materialize, it’s hard to remain bullish on this company from a near-term perspective. The risks are simply too steep right now to justify calling RIVN stock a buy at current levels. It’s likely better to wait for a clear pathway to profitability before jumping into most EV stocks right now.
Conclusion
In conclusion, while Rivian has a strong brand and growing market share, the near-term risks are too great to justify a buy recommendation at current levels. However, if the company can deliver an earnings beat and continue to execute on its cost-cutting measures, it could be a stock poised for upside in the future. Investors should keep a close eye on Rivian’s earnings report and wait for a clear pathway to profitability before making a move.
