Could Buying Rivian Stock Today Set You Up for Life?

Shares of Rivian Automotive (NASDAQ: RIVN) have fallen more than 90% from their all-time highs in late 2021. It's a worrying sign that Wall Street lacks confidence in the company. But is that a justified view?

Perhaps investors just flocked like lemmings into electric vehicle (EV) stocks a few years ago, and Rivian's shares were bid up too high. Maybe the stock, which is trading hands around $12 per share today, is priced to set investors up for life if they can see the green shoots that are starting to show up.

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Here's what you need to think about when you look at Rivian today.

Rivian achieved an important goal

One thing investors should always be looking for is a company that can live up to the goals it lays out for investors. Rivian's big goal in 2024 was to turn a modest gross profit in the fourth quarter. It did just that, posting a gross profit of $170 million. Achieving that goal required the company to shut down and overhaul its production facility, which was another big goal that was successfully completed in 2024.

Image source: Getty Images.

The interesting thing is that the company's production overhaul didn't go quite as smoothly as hoped. After the successful plant upgrade, Rivian found that it was facing a shortage of key EV vehicle parts. That forced the company to shift gears on the fly so it could still achieve its modest gross profit goal. A close partnership with Amazon, which buys delivery trucks from Rivian, worked to the EV maker's advantage here, as production shifted toward delivery vehicles, where there were no parts shortage issues.

All in, the fourth quarter was a good one for Rivian. It proved it could live up to its stated goals despite having to face operational headwinds. That said, a modest gross profit in the fourth quarter is just a stepping stone. The company's full-year 2024 gross profit came to a negative $1.2 million. And the fourth-quarter and full-year earnings were both negative, at a loss of $743 million for the quarter and $4.7 billion for the year.

Rivian continues to move forward

Here's the thing. Even though the company still lost money in 2024, the loss was much lower than experienced in 2023. Specifically, the $4.7 billion loss in 2024 was a roughly $690 million improvement over the loss of $5.4 billion in 2023. Rivian is very clearly moving in the right direction, even though it still has a long way to go before it is profitable.

That won't happen in 2025, noting that the company's production goals are basically flat-ish and the expectation is for a modest full-year gross profit. Basically, Rivian is looking to sustain what it achieved in the fourth quarter of 2024 through all of 2025. But while it is doing that, it is continuing to work on its business.

RIVN data by YCharts

That includes working to sell more delivery trucks to customers beyond Amazon. That's important because the increased truck production and deliveries in the fourth quarter of 2024 means that Amazon won't likely need/want as many trucks in 2025. However, the success of the Amazon relationship provides a solid selling point for Rivian with other customers.

Beyond this, Rivian was able to expand its relationship with Volkswagen in 2024. This is a positive in two ways. First, the giant European carmaker looks likely to become a key customer for Rivian's EV technology. Second, the partnership is providing Rivian with cash that it can use to fund its business while it continues to work toward black ink on the bottom line. Grants from the U.S. government have also been helpful on the cash front.

Notably, cash and short-term investments on the company's balance sheet fell from about $9.4 billion at the end of 2023 to $7.7 billion at the end of 2024. Clearly, the cash infusions Rivian is getting will be vital to its long-term success as a company.

Could Rivian set you up for life?

Rivian is not for the faint of heart. It is a money-losing start-up in an industry that is highly competitive and filled with established giants. However, the company continues to execute fairly well, hitting the goals it has laid out for investors to monitor.

If Rivian can keep doing that, it could become a competitive force in the EV sector and, perhaps, even become a highly profitable company -- in time. You'll need to have a glass-half-full view of the company to buy it, but there could be material growth potential here as Rivian continues its drive toward black ink.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Reuben Gregg Brewer has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.