Is Rivian Stock a Buy After Its Recent Pullback?

Key Points

• Rivian's third-quarter deliveries rose 32% year over year and beat expectations.

• Management narrowed full-year delivery guidance, implying a softer fourth quarter.

• The stock's valuation looks more reasonable after the drop.

• 10 stocks we like better than Rivian Automotive ›

Rivian Automotive (NASDAQ: RIVN) slid again this week after the electric vehicle maker reported quarterly deliveries and trimmed its full-year outlook. The stock's move follows a short run-up into the report and comes as the market reassesses how much demand pulled forward ahead of tax-credit changes will weigh on year-end results.

Rivian, which designs and builds the R1T pickup, the R1S SUV, and commercial delivery vans, has a valuation priced for rapid growth for years to come. So investors have good reason to look at any clues they can get about sales potential. Unfortunately, the company's decision to lower the midpoint of its guidance range suggests the second half of the year won't have the zing to it that some bulls were probably hoping for.

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Deliveries surge but guidance warrants caution

Rivian delivered 13,201 vehicles in the third quarter, up 32% from a year ago and above the consensus analyst estimate. Production lagged, coming in at 10,720 units.

Alongside the update, management narrowed 2025 delivery guidance to 41,500 to 43,500 units. The midpoint of this range falls below the midpoint of its previous guidance for 40,000 to 46,000, suggesting that management believes the high end of the prior range is no longer possible -- despite a stronger-than-expected third quarter. Additionally, it implies a relatively light fourth quarter compared with last year's 14,183 deliveries.

The guidance change arrived as U.S. incentive dynamics shifted. The $7,500 federal tax credit for electric vehicles expired on Oct. 1, removing a key price lever that had supported demand across the industry. That change, combined with higher tariffs on imported parts, adds cost and demand uncertainty for the rest of the year. Rivian set Nov. 4 for its third-quarter earnings release, when investors will get a more comprehensive read on order trends and margin progress.

Financially, the company is still working toward sustained profitability after achieving its first positive gross profit in the fourth quarter of 2024. In that report, Founder and CEO RJ Scaringe said, "This quarter we achieved positive gross profit and removed $31,000 in automotive cost of goods sold per vehicle delivered in Q4 2024 relative to Q4 2023," emphasizing that cost work is foundational for the upcoming, lower-priced R2 line. Management also guided for "modest" gross profit in 2025 -- a useful marker for expectations.

More recently, Rivian's second-quarter 2025 shareholder letter showed cash, cash equivalents, and short-term investments of about $7.5 billion, giving the company balance-sheet runway to keep investing in manufacturing efficiency and the R2 program. Still, the quarter reflected weak business economics, including a sizable adjusted EBITDA loss. Additionally, the company guided for a massive full-year adjusted EBITDA loss of between $2 billion and $2.25 billion, highlighting the need for it to improve its profitability quickly.

What all of this means for the stock

Following the sell-off, Rivian's market cap is above $16 billion as of this writing. Framed against trailing-12-month revenue of about $5.2 billion, shares trade at about 3.2 times last year's sales -- no longer stretched for a fast-growing electric vehicle company, but not attractive either, given Rivian's ongoing losses and a guidance path implying a slower finish to 2025. Put differently, the current price asks a lot from investors. It implies a bet on continued cost reduction, stable demand into 2026, a timely and well-received R2 launch, and strong growth in deliveries for years to come.

All of that said, the business is not standing still. Deliveries are growing year over year, cost per vehicle has been moving down, and a strong balance sheet provides time to keep improving manufacturing and launch the R2 -- a lower-priced family vehicle aimed at broadening the company's addressable market. If Rivian can maintain double-digit delivery growth, demonstrate further cost progress when it reports its third-quarter financial results in November, and maintain robust liquidity, today's valuation could prove reasonable over a multiyear horizon. But again, that's a lot to ask.

Overall, this pullback looks more like a watch-list moment than a clear cut "buy the dip." Potential new buyers of the stock might prefer to wait for two things: confirmation that fourth-quarter demand holds up post-credit expiration and evidence that unit economics keep improving. If both show up -- and management tightens the path to positive gross profit -- Rivian's risk-reward could look more compelling.

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Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.