Rivian (RIVN)

Electric vehicle manufacturer Rivian (NASDAQ:RIVN) beat Wall Street’s revenue expectations in Q4 CY2025, but sales fell by 25.8% year on year to $1.29 billion. Its GAAP loss of $0.66 per share was 16.7% above analysts’ consensus estimates.

Company Overview

The manufacturer of Amazon’s delivery trucks, Rivian (NASDAQ:RIVN) designs, manufactures, and sells electric vehicles and commercial delivery vans.

Much capital investment and technical know-how are needed to manufacture functional, safe, and aesthetically pleasing automobiles for the mass market. Barriers to entry are therefore high, and auto manufacturers with economies of scale can boast strong economic moats. However, this doesn’t insulate them from new entrants, as electric vehicles (EVs) have entered the market and are upending it. This has forced established manufacturers to not only contend with emerging EV-first competitors but also decide how much they want to invest in these disruptive technologies, which will likely cannibalize their legacy offerings.

Competitors in the electric vehicle industry include Tesla (NASDAQ:TSLA), Ford (NYSE:F), General Motors (NYSE:GM), and Lucid Motors (NASDAQ:LCID).

A company’s long-term performance is an indicator of its overall quality. Even a bad business can shine for one or two quarters, but a top-tier one grows for years. Thankfully, Rivian’s 168% annualized revenue growth over the last four years was incredible. Its growth beat the average industrials company and shows its offerings resonate with customers, a helpful starting point for our analysis.

Long-term growth is the most important, but within industrials, a stretched historical view may miss new industry trends or demand cycles. Rivian’s annualized revenue growth of 10.2% over the last two years is below its four-year trend, but we still think the results suggest healthy demand. Rivian’s recent performance shows it’s one of the better Automobile Manufacturing businesses as many of its peers faced declining sales because of cyclical headwinds.

We can better understand the company’s revenue dynamics by analyzing its number of vehicles delivered, which reached 9,745 in the latest quarter. Over the last two years, Rivian’s vehicles delivered declined by 8.2% annually. Because this number is lower than its revenue growth, we can see the company benefited from price increases.

This quarter, Rivian’s revenue fell by 25.8% year on year to $1.29 billion but beat Wall Street’s estimates by 0.7%.

Looking ahead, sell-side analysts expect revenue to grow 25.8% over the next 12 months, an improvement versus the last two years. This projection is eye-popping and suggests its newer products and services will fuel better top-line performance.

Gross profit margin is a critical metric to track because it sheds light on its pricing power, complexity of products, and ability to procure raw materials, equipment, and labor.

Rivian has bad unit economics for an industrials business, signaling it operates in a competitive market. This is also because it’s an automobile manufacturer.

Automobile manufacturers have structurally lower profitability as they often break even on the initial sale of vehicles and instead make money on parts and servicing, which come many years later - this explains why new entrants whose fleets are too young to generate substantial aftermarket revenues have negative gross margins. As you can see below, these dynamics culminated in an average negative 40.4% gross margin for Rivian over the last five years.

In Q4, Rivian produced a 9.3% gross profit margin, in line with the same quarter last year. On a wider time horizon, Rivian’s full-year margin has been trending up over the past 12 months, increasing by 26.8 percentage points. If this move continues, it could suggest an environment where the company has better pricing power and stable or shrinking input costs (such as raw materials).

Rivian’s high expenses have contributed to an average operating margin of negative 141% over the last five years. Unprofitable industrials companies require extra attention because they could get caught swimming naked when the tide goes out.

On the plus side, Rivian’s operating margin rose over the last five years, as its sales growth gave it operating leverage. We’ll take Rivian’s improvement as many Automobile Manufacturing companies saw their margins fall (along with revenue, as mentioned above) because the cycle turned in the wrong direction.

Rivian’s operating margin was negative 64.8% this quarter.

We track the long-term change in earnings per share (EPS) for the same reason as long-term revenue growth. Compared to revenue, however, EPS highlights whether a company’s growth is profitable.

Although Rivian’s full-year earnings are still negative, it reduced its losses and improved its EPS by 21.3% annually over the last five years. The next few quarters will be critical for assessing its long-term profitability. We hope to see an inflection point soon, especially since it recently diluted shareholders by forming a $5.8 billion joint venture with Volkswagen in November 2024.

Like with revenue, we analyze EPS over a shorter period to see if we are missing a change in the business.

For Rivian, its two-year annual EPS growth of 27% was higher than its five-year trend. We love it when earnings improve, but a caveat is that its EPS is still in the red.

In Q4, Rivian reported EPS of negative $0.66, up from negative $0.70 in the same quarter last year. This print easily cleared analysts’ estimates, and shareholders should be content with the results. Over the next 12 months, Wall Street expects Rivian to improve its earnings losses. Analysts forecast its full-year EPS of negative $3.07 will advance to negative $2.91.

Although earnings are undoubtedly valuable for assessing company performance, we believe cash is king because you can’t use accounting profits to pay the bills.

Rivian’s demanding reinvestments have drained its resources over the last five years, putting it in a pinch and limiting its ability to return capital to investors. Its free cash flow margin averaged negative 123%, meaning it lit $123.32 of cash on fire for every $100 in revenue.

Taking a step back, an encouraging sign is that Rivian’s margin expanded during that time. In light of its glaring cash burn, however, this improvement is a bucket of hot water in a cold ocean.

Rivian burned through $1.14 billion of cash in Q4, equivalent to a negative 89% margin. The company’s cash flow turned negative after being positive in the same quarter last year, but it’s still above its five-year average. We wouldn’t read too much into this quarter’s decline because investment needs can be seasonal, leading to short-term swings. Long-term trends carry greater meaning.

As long-term investors, the risk we care about most is the permanent loss of capital, which can happen when a company goes bankrupt or raises money from a disadvantaged position. This is separate from short-term stock price volatility, something we are much less bothered by.

Rivian posted negative $2.06 billion of EBITDA over the last 12 months, and its $6.65 billion of debt exceeds the $6.08 billion of cash on its balance sheet. This is a deal breaker for us because indebted loss-making companies spell trouble.

We implore our readers to tread carefully because credit agencies could downgrade Rivian if its unprofitable ways continue, making incremental borrowing more expensive and restricting growth prospects. The company could also be backed into a corner if the market turns unexpectedly. We hope Rivian can improve its profitability and remain cautious until then.

We were impressed by how significantly Rivian blew past analysts’ EBITDA expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its full-year EBITDA guidance missed. Overall, this print had some key positives. The stock traded up 7.6% to $15.09 immediately after reporting.

Updated: February 12, 2026 at 4:35 PM EST

Before deciding whether to buy Rivian or pass, we urge investors to consider business quality, valuation, and the latest quarterly results.

Aside from its balance sheet, Rivian is a pretty good company. First of all, the company’s revenue growth was exceptional over the last four years. And while its operating margins reveal poor profitability compared to other industrials companies, its rising cash profitability gives it more optionality. On top of that, Rivian’s expanding operating margin shows the business has become more efficient.

Rivian’s forward price-to-sales ratio is 2.5x. Certain aspects of its fundamentals are attractive, but we aren’t investing at the moment because its balance sheet makes us uneasy. We recommend investors interested in the company wait until it generates sufficient cash flows or raises money before getting involved.

Wall Street analysts have a consensus one-year price target of $16.96 on the company (compared to the current share price of $15.09), implying they see 12.4% upside in buying Rivian in the short term.