RIVN

Rivian Stock Analysis: Get Yourself Some When RIVN Falls to This Price

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I’ll admit, it’s not an easy time to invest in electric vehicle startups. However, I’m inviting you to take a serious look at Rivian Automotive (NASDAQ:RIVN). Rivian stock is out of favor right now, but that’s why you should consider it for a small portfolio position. 

Rivian Automotive has an important financial goal that could be achieved before the year is over. So, be patient and don’t get pulled into a bear trap, as Rivian’s buy-and-hold investors will prevail eventually.

A Huge Incentive Package for Rivian

Even if some short-term stock traders are worried about Rivian Automotive, at least one local government supports the EV maker. Consequently, Rivian is set to receive a capital infusion valued at more than $800 billion.

To be more specific, Rivian Automotive announced an $827 million incentive package from the State of Illinois Department of Commerce & Economic Opportunity. Among other endeavors, the funding will help Rivian expand its operations in the Illinois city of Normal.

There are a couple of crucial takeaways from this news item. First, with this new funding, Rivian Automotive can really focus on the build-out in Illinois. As you may recall, Rivian recently halted the construction of its $5 billion electric-truck factory in Georgia.

Second, if Rivian Automotive can effectively deploy the funding to expedite its Illinois operations, then the automaker should be able to speed up the production of its R2 mid-size SUV model. So, keep an eye on this highly encouraging news story for further developments.

Rivian Automotive Aims for a ‘Modest’ Gross Profit

In other news, Rivian Automotive released its first-quarter 2024 results not long ago. The company generated revenue of $1.204 billion, which was roughly in line with Wall Street’s expectations.

That’s not the most exciting outcome, but there’s more to the story. Indeed, I suspect that some stock traders missed a significant detail in Rivian Automotive’s quarterly report.

In particular, Rivian Automotive expects to achieve a “modest” gross profit in this year’s fourth quarter. That would be an impressive feat, considering Rivian posted a negative gross profit of $527 million for Q1 of 2024.

Bear in mind, however, that this gross-profit result included $171 million of costs involving, among other things, “updates being made to our Normal Factory during the plant retooling upgrade.” It looks like there are some temporary costs factored in to Rivian Automotive’s first-quarter 2024 negative gross profit.

Rivian Automotive is implementing “cost of revenue efficiency initiatives” and an EV-platform “retooling upgrade.” Rivian anticipates “significant improvement in the material and conversion cost of its vehicles” and is confident about achieving a “modest” fourth-quarter gross profit.

Rivian Stock Under $10 Is a Gift

If Rivian Automotive achieves anything close to a gross profit this year, this would represent a marked improvement. Also, the Illinois government’s financial award to Rivian should help the automaker speed up its R2 production pace.

Let’s not be overconfident, though. The path forward for Rivian Automotive and its stakeholders won’t be easy. Still, beaten-down Rivian stock seems to have priced in all of the automaker’s challenges and none of the opportunities.

Therefore, investors should consider picking up a few Rivian shares if they’re under $10, with a goal of getting back to $25 eventually.

On the date of publication, David Moadel 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.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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