Many progress shares have struggled thus far this 12 months. Rivian (RIVN -3.79%) is not any exception. Shares are down roughly 16% 12 months up to now, though the inventory’s volatility has shifted this determine round fairly a bit.
The unusual factor is that shares are dropping in worth proper as the corporate gears up for its greatest progress spurt in years. May this be the neatest funding you make in 2025?
Be careful for this progress inflection level
As an electrical automotive inventory, Rivian struggled in 2024 because the trade handled lower-than-expected gross sales progress. To be clear, electrical car (EV) gross sales nonetheless rose final 12 months, however progress charges fell beneath most analysts’ forecasts.
With no well-known model title like Tesla, or the near-term expectation for brand spanking new mannequin introductions like Lucid Group, Rivian has struggled for relevancy. However that wrestle could possibly be over inside 12 months, creating the potential for giant upside to the present inventory worth.
One of many greatest progress hurdles that EV makers face is making inexpensive, mass market autos a actuality. Producing low cost vehicles usually requires scale, however the comparatively small measurement of latest automakers like Rivian and Lucid makes that tough. Tesla addressed this problem by first introducing a luxurious car with decrease volumes and better worth factors to ascertain the EV maker as a model. Solely after it achieved this preliminary scale did the corporate transfer into higher-volume, lower-price-point fashions.
Automakers like Rivian and Lucid have tried to observe this confirmed plan for progress. Lucid simply launched its second luxurious mannequin earlier this 12 months. However by many metrics, Rivian is a 12 months or two forward as a result of it already has two luxurious fashions available on the market. Beginning in early 2026, it additionally plans to start transport the primary of three new mass market autos, all of that are anticipated to have a worth level of below $50,000. That worth level ought to unlock tens of tens of millions of latest patrons for Rivian’s autos.
While you take a look at analyst expectations for progress this 12 months, Rivian is available in lifeless final versus the competitors, with simply 8.3% income progress anticipated for 2025. Understandably, Rivian shares are priced the most cost effective on a price-to-sales (P/S) foundation, buying and selling at simply 2.3 instances gross sales. However if you happen to stay up for 2026, this equation might flip. Mass market autos had been the important thing to renewed progress for Tesla. So if you happen to’re prepared to look past Wall Avenue’s typical 12-month time horizon, you can foreseeably snap up Rivian shares at a reduction earlier than the subsequent leg of progress arrives.
Do you have to maybe wait a bit extra earlier than leaping in? The reply would possibly shock you.
RIVN P/S Ratio information by YCharts.
Do you have to purchase Rivian inventory at the moment or in 2026?
It is affordable to ask the query: If Rivian’s progress will not return till 2026, must you wait till then to purchase shares as a substitute of ready patiently for a 12 months?
It is exhausting to purchase progress shares at a reduction. That is as a result of as soon as gross sales progress returns, the market usually rerates shares to the next valuation. To make the largest revenue, buyers should purchase shares earlier than the remainder of the market catches on. This usually requires shopping for properly prematurely of progress inflection factors, ready patiently for progress to return.
Will Rivian’s progress spike in 2026? Nothing is for sure. But when Tesla’s progress historical past is any indication, the discharge of mass market autos is a good recipe for doubling and even triple gross sales. At simply 2.3 instances gross sales, Rivian’s inventory is priced too cheaply ought to these progress charges arrive in 2026, and even 2027. This story will take time, however Rivian shares can actually be thought of a “good” funding for affected person progress buyers trying to get an edge available on the market.
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 coverage.
