Despite facing challenges over the past six months, Rivian Automotive (NASDAQ:RIVN) is experiencing a potential turnaround.
The electric vehicle producer is on the brink of a significant acquisition, which has positively impacted RIVN stock. Although the financial specifics of the deal are undisclosed, this development arrives at an opportune moment.
Despite recent setbacks, Rivian’s performance this month has been encouraging, demonstrating resilience and signaling continued growth potential.
Although being overlooked by many, an important recent development involves Rivian Automotive’s acquisition of a Swedish company.
Rivian presents this acquisition as a positive move, but potential investors should carefully evaluate the timing and financial implications of such acquisitions for the company’s current situation.
Recently on Rivian
Despite recent volatility, Rivian has experienced a strong month, with RIVN stock rising over 15%. Despite the negative publicity, this electric truck innovator continues to perform well overall.
Although the stock has been removed from the Nasdaq-100 Index, Rivian remains resilient and determined to overcome challenges, demonstrating its commitment to success.
RIVN stock may bounce back with the recent deal’s momentum. The acquisition of Sweden-based firm Iternio, which owns ABRB, offers growth potential.
ABRP, known as the largest EV Planning public service, could enhance Rivian’s routing services for drivers, contributing to future success.
Rivian’s Greener Pasture
Rivian encountered supply chain challenges but managed a 36% production increase in Q3. Despite missing its previous target, the company aims to manufacture 50,000 vehicles this year, with the potential to exceed that goal significantly.
Rivian anticipates improved visibility and potential relief from supply constraints, although supplier issues may persist.
While a report suggested a target of 62,000 vehicle production, Rivian clarified it was misinterpreted. It may intentionally manage expectations due to supply chain challenges.
Despite the recent charging network deal with Tesla (NASDAQ:TSLA), Rivian Automotive continues to face persistent issues. The company remains unprofitable, with analysts not expecting a sudden turnaround in the current quarter.
Production has proved difficult, and the ability for Rivian to control expenses is also crucial, as Rivian’s cost of revenues nearly doubled from the first quarter of 2022 to the first quarter of 2023.
Rivian’s acquisition of Iternio could prompt some investors to look at this company more as a software name, rather than an EV player. Indeed, such a strategy worked for rival Tesla.
However, the financial details of the acquisition have not been disclosed, making it difficult to assess the value and potential return on investment for Rivian.
So What Now?
Rivian’s future success remains uncertain as the company faces financial challenges. Despite having a significant amount of cash, it continues to burn through billions of dollars each year.
While there is potential for substantial gains if Rivian achieves profitability, it remains a high-risk investment with a long road ahead.
Thus, for investors looking to put some speculative capital to work, there are worse options out there. I just wouldn’t bet the farm on this one, just yet. This is a company that remains a “show me” story to many investors, for good reason.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.