Is A Rally To $30 On The Horizon For Rivian Stock?

Core Insights - Rivian's stock (NASDAQ: RIVN) surged over 23% following Q3 results that exceeded expectations, with revenue growing 78% year-over-year to $1.56 billion and gross profit turning positive at $24 million, marking an end to two consecutive quarters of losses [2][3] - Despite this improvement, the stock remains significantly below its 2021 IPO price of around $130, currently trading near $15 [2] Financial Performance - Rivian's revenue is projected to increase from $55 million in 2021 to approximately $4.97 billion in 2024, reflecting a compounded annual growth rate of 73% per year [8] - The company anticipates slower growth of about 8% this year, reaching $5.4 billion, but expects a sales surge of around 32% in 2026 to approximately $7.1 billion [9] - If sales grow by about 35% from 2026 onward, revenues could rise to about $13 billion by 2028 [9] Growth Strategy - Rivian is focusing on scaling its production capacity, increasing its Illinois facility to 215,000 units and establishing a new plant in Georgia with a capacity of 400,000 units by 2028 [6] - The introduction of the R2 midsize SUV, anticipated in 2026 at approximately $45,000, is seen as a significant growth catalyst aimed at penetrating the mass market [5][6] Partnerships and Collaborations - Rivian is deepening its collaboration with Volkswagen through a joint venture, integrating Rivian's EV architecture and software into VW models starting in 2027, with Volkswagen committing $1 billion and plans to increase that to $5.8 billion [7] - This partnership aims to commercialize Rivian's software-defined vehicle platform, potentially creating a new revenue source beyond vehicle sales [7] Margin Improvement - Rivian is focused on cost reduction and improving margins, with a surprising gross margin surpass in Q3 2025 [10] - The company aims to reduce the R2's bill of materials to around $32,000 per vehicle, which could significantly enhance gross margins [10] - If adjusted net margins reach about 10% by 2028, this could lead to net income of approximately $1.3 billion for FY '28 [10] Valuation Potential - Rivian could see a richer valuation if it successfully ramps up EV production and begins licensing its EV architecture and technology, potentially achieving a market cap of around $40 billion, nearly 2.2x current levels [11]