Is Rivian Stock a Buy Right Now?

The S&P 500 and Nasdaq Composite have held up well so far in 2024, but one stock that hasn't been such a great investment is Rivian Automotive (NASDAQ: RIVN) . Shares of the electric carmaker are down nearly 45% in 2024. At just $13 per share, Rivian stock is dangerously close to all-time lows.

Could this be an opportunity to buy the dip , or are investors best off avoiding a potential falling knife ?

The good news with Rivian

Back in June, Rivian announced the formation of a joint venture with Volkswagen . Per the agreement, Volkswagen plans to invest up to $5 billion in Rivian . Working with a much larger automobile manufacturer can help Rivian in several ways. First, it opens Rivian up to new geographic markets. Moreover, Rivian can leverage Volkswagen's supplier network to help find more efficient ways to develop its costly EVs.

While the EV market is dominated by Tesla and a number of Chinese automakers, Rivian has a unique advantage. Unlike Tesla and many of its peers, Rivian's car models are more akin to a Jeep or Range Rover. Differentiating itself as more of an SUV player could be a savvy move in the long run as it separates Rivian from larger competitors and could be more appealing to certain customer demographics.

Although this all looks encouraging for Rivian, there are some lowlights that investors need to be aware of, too.

Image source: Getty Images.

The not-so-good news with Rivian

Developing EVs is extremely costly. It requires hefty investments in capital expenditures (capex), engineering talent, and marketing. As seen in the table below, Rivian has yet to figure out how to build its vehicles in a profitable way.

Image source: Rivian Investor Relations.

Per the chart above, it's easy to spot a couple of big problems. First, Rivian's production output has been all over the place. While deliveries have nominally risen, the company's production capacity has been volatile. This relationship is sub-optimal and could be an issue as it pertains to fulfilling consumer supply and demand.

The bigger issue, however, relates to the company's lack of profitability. For the quarter that ended June 30, Rivian's gross profit per vehicle was a negative $32,705. What's worse is that Rivian's negative unit economics haven't really improved at all over the past year.

So, while the company has attracted some high-profile attention and demonstrated it can generate some demand for its EVs, Rivian has so far been able to prove that it has mastered car production in a profitable way.

Is Rivian stock a good buy right now?

It's hard to make a case to invest in Rivian over a much larger, sophisticated, and profitable peer such as Tesla. Moreover, although Rivian's valuation has cratered , I personally think the sell-off is warranted.

The way I see it, investing in Rivian is rooted more in a long-term bullish outlook on the EV industry in general. I think investors looking for exposure to the EV industry are better off assessing other options.

My trepidation over Rivian is that the stock could experience some upward momentum but for the wrong reasons. So, while this would make Rivian appear like a good investment, the underlying reasons fueling the stock price might not be rooted in sound fundamentals.

In order to make a strong case for Rivian, I think the company is going to need to do more to prove that its business is sustainable. Until then, I would look elsewhere and monitor Rivian's progress.

Adam Spatacco has positions in Tesla. The Motley Fool has positions in and recommends Tesla and Volkswagen Ag. The Motley Fool has a disclosure policy .