Sign with logo on facade of Rivian location, Walnut Creek, California, August 25, 2025. (Photo by Smith Collection/Gado/Getty Images)
Gado via Getty Images
We think that RIVN stock (NASDAQ: RIVN) might potentially increase to 2x from current levels of $14 per share if its growth strategy and margin expansion plans succeed. Our optimistic scenario relies on the introduction of Rivian’s new mass-market SUV and the enhancement of profitability in the coming years. Shares have already begun to show signs of recovery, increasing by nearly 20% over the past month following a revenue beat in Q2 2025 and rising optimism regarding interest rate reductions this month. Growth-oriented and futuristic stocks like Rivian generally respond vigorously to lower rates. Nevertheless, the stock is trading significantly below its 2021 IPO price of approximately $130, and is currently priced around $14.
There have been considerable headwinds, such as tariffs on parts imported from Canada and Mexico, cuts to EV subsidies, and intensified competition. Nevertheless, Rivian’s Q2 revenue reached $1.3 billion, exceeding expectations, while U.S. sales surged in July, with volumes achieving a 10-month peak, up 20% from June. The stock’s potential to double depends on whether Rivian can revamp its fundamentals and leverage recent momentum. In terms of valuation, the stock appears to be reasonably priced compared to the overall market, with a price-to-sales ratio of about 3x, which is similar to the S&P 500. For further information, see: RIVN Valuation Ratios.
Product Strategy and Partnerships
Rivian’s products have received positive reviews, and the company has successfully established the model for the EV pickup – a segment where Tesla’s Cybertruck has thus far created more buzz than concrete traction. The long-term investment thesis hinges on Rivian’s capacity to scale beyond its niche premium offerings and extend its reach through strategic partnerships. Currently, Rivian is offering the R1T pickup and R1S SUV, both priced over $70,000. However, the key growth catalyst will be the R2, a midsize SUV anticipated in 2026 at around $45,000, aimed at penetrating the mass market. At the same time, Rivian is strengthening its relationship with Volkswagen through a joint venture that will incorporate Rivian’s EV architecture and software into VW models by 2027.
Volkswagen has already invested $1 billion in Rivian, with plans to amplify the partnership to $5.8 billion, merging Rivian’s drivetrain expertise with VW’s global manufacturing capabilities. To facilitate this initiative, Rivian is expanding its Illinois facility to accommodate 215,000 units and is constructing a Georgia plant with a capacity of 400,000 units by 2028. Collectively, these advancements should enable Rivian to expand its customer base, reduce costs, and foster the kind of volume growth necessary to evolve from a relatively niche entity into a major player in the EV market. What Will Drive Tesla’s Next Surge?
The 2x Math
Rivian’s revenues soared from $55 million in 2021 to approximately $4.97 billion in 2024. From 2022 to 2024, sales increased nearly 3x, which equates to a compounded annual growth rate of 73% per year. Analysts predict slower growth of about 6% this year to $5.3 billion, attributed to tariffs on imported auto components and subsidy reductions; however, the market anticipates a sales surge of around 32% in 2026, reaching approximately $7 billion. If sales indeed rise by roughly 35% from 2026 forward, driven by Rivian’s more mainstream launches like the R2, revenues could reach around $13 billion by 2028.
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While Rivian continues to incur substantial operating and net losses, the company is focused on reducing costs and enhancing margins. For instance, the firm is relying on its VW partnership to target reducing the R2’s bill of materials to around $32,000 per vehicle, which could lead to a significant improvement in gross margins. Additionally, Rivian has also been implementing workforce reductions in its commercial and sales departments, which may assist in lowering fixed costs. If adjusted net margins rise to about 10% by 2028, driven by greater scale and improved absorption of fixed costs, it would translate to net income of around $1.3 billion for FY’28. For comparison, Tesla’s net margins were at low double-digit percentages during its consolidation phase from 2021 to 2024.
The markets currently evaluate Tesla at approximately 200x projected 2025 earnings and about 12x revenues. Certainly, the market perceives Tesla as more than just another EV manufacturer but as a proxy for physical AI, given its significant focus on autonomous driving software and an emerging focus on humanoid robots. However, Rivian could also achieve a more favorable valuation if it executes its EV ramp-up effectively. If we assume that Rivian stock could be valued at around 25x its earnings, a very small fraction of Tesla’s multiple, this would equate to a market cap of about $33 billion, or nearly 2x current prices. Read RIVN Dip Buyer Analyses to understand how the stock has bounced back from sharp declines in the past.
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