Electric vehicle (EV) maker Rivian just delivered a shocking blow to the naysayers. In a stunning turn of events, the company not only surpassed Wall Street's Q3 expectations but also managed to turn a profit—a rare feat in today's volatile EV market. But here's where it gets controversial: despite this success, Rivian's stock has been on a rollercoaster ride, leaving investors scratching their heads. So, what's really going on behind the scenes?
Rivian Automotive (RIVN) reported its second quarterly gross profit of the year, driven by a strategic joint venture with Volkswagen and its burgeoning software and services division. According to LSEG's analyst estimates, the company outperformed expectations across the board:
- Loss per share: 65 cents (adjusted) vs. 72 cents expected
- Revenue: $1.56 billion vs. $1.5 billion anticipated
These numbers sent Rivian's stock soaring over 3% in after-hours trading on Tuesday, a welcome rebound after a 5.2% dip earlier in the day. Yet, the stock remains down approximately 6% year-to-date, raising questions about investor confidence in the long term.
And this is the part most people miss: Rivian's gross profit—a metric investors scrutinize closely—came in at $24 million for Q3, defying FactSet's consensus estimate of a $38.6 million loss. Both its automotive and software segments exceeded expectations, showcasing the company's diversified strength.
In a shareholder letter, Rivian CEO and founder RJ Scaringe acknowledged near-term challenges like trade uncertainties, tariffs, and regulatory shifts but emphasized the company's unwavering focus on long-term growth and value creation. However, here’s the controversial bit: while Rivian’s automotive operations still posted a $130 million loss, this marked a $249 million improvement year-over-year. The question is, can this momentum be sustained?
Rivian’s financial performance was bolstered by a $154 million contribution from its VW joint venture and software services, offsetting automotive losses. Gross profit, a critical indicator of profitability before expenses, remains a key focus for investors. The company maintained its 2025 guidance, projecting an adjusted earnings loss of $2 billion to $2.25 billion, capital expenditures of $1.8 billion to $1.9 billion, and vehicle deliveries between 41,500 and 43,500 units. Notably, it revised its gross profit outlook to breakeven, down from earlier profit targets.
Production of the highly anticipated R2 midsize vehicle is on track for the first half of 2025 at Rivian’s Illinois plant. With $7.7 billion in total liquidity, including $7.1 billion in cash and short-term investments, Scaringe assured stakeholders that the company is “really well positioned” for the R2 launch. He also downplayed concerns about rare earth minerals and chip supply disruptions from China, particularly from Nexperia, a China-owned auto supplier. But here’s the kicker: while China has hinted at chip export exemptions for Nexperia, the situation remains fluid, leaving room for potential future disruptions.
Rivian’s Q3 revenue surged 78% year-over-year to $1.56 billion, up from $874 million. However, its net loss widened slightly to $1.17 billion, or 96 cents per share, compared to $1.1 billion, or $1.08 per share, in the same period last year. These figures highlight the broader challenges EV manufacturers face, including rising costs due to tariffs, slower-than-expected EV sales, and regulatory headwinds like the phase-out of federal consumer incentives.
While Rivian didn’t provide immediate updates on tariff impacts, it previously noted that levies are costing “a couple thousand dollars per unit” this year. Regulatory changes continue to weigh on operations, adding another layer of complexity to the company’s growth trajectory.
Here’s the thought-provoking question: Can Rivian sustain its momentum in the face of industry-wide headwinds and internal challenges? Or will the EV market’s volatility ultimately derail its ambitious plans? Share your thoughts in the comments—we’d love to hear your take!
