Rivian (RIVN)

Electric vehicle manufacturer Rivian (NASDAQ:RIVN) announced better-than-expected revenue in Q3 CY2025, with sales up 78.3% year on year to $1.56 billion. Its non-GAAP loss of $0.65 per share was 9% 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 sales performance can indicate its overall quality. Any business can experience short-term success, but top-performing ones enjoy sustained growth for years. Over the last three years, Rivian grew its sales at an incredible 171% compounded annual growth rate. Its growth surpassed the average industrials company and shows its offerings resonate with customers, a great 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 24.2% over the last two years is below its three-year trend, but we still think the results suggest healthy demand.

We can better understand the company’s revenue dynamics by analyzing its number of vehicles delivered, which reached 13,201 in the latest quarter. Over the last two years, Rivian’s vehicles delivered grew by 2.8% annually. Because this number is lower than its revenue growth, we can see the company benefited from price increases.

This quarter, Rivian reported magnificent year-on-year revenue growth of 78.3%, and its $1.56 billion of revenue beat Wall Street’s estimates by 4.9%.

Looking ahead, sell-side analysts expect revenue to grow 1.2% over the next 12 months, a deceleration versus the last two years. This projection is underwhelming and implies its products and services will see some demand headwinds. At least the company is tracking well in other measures of financial health.

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 44.1% gross margin for Rivian over the last five years.

In Q3, Rivian produced a 1.5% gross profit margin, marking a 46.4 percentage point increase from -44.9% in the same quarter last year. Rivian’s full-year margin has also been trending up over the past 12 months, increasing by 44.8 percentage points. If this move continues, it could suggest a less competitive environment where the company has better pricing power and leverage from its growing sales on the fixed portion of its cost of goods sold (such as manufacturing expenses).

Operating margin is a key measure of profitability. Think of it as net income - the bottom line - excluding the impact of taxes and interest on debt, which are less connected to business fundamentals.

Rivian’s high expenses have contributed to an average operating margin of negative 148% 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. Still, it will take much more for the company to reach long-term profitability.

In Q3, Rivian generated a negative 63.1% operating margin.

Revenue trends explain a company’s historical growth, but the change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Although Rivian’s full-year earnings are still negative, it reduced its losses and improved its EPS by 33.4% annually over the last two years.

In Q3, Rivian reported adjusted EPS of negative $0.65, up from negative $0.99 in the same quarter last year. This print beat analysts’ estimates by 9%. Over the next 12 months, Wall Street expects Rivian to perform poorly. Analysts forecast its full-year EPS of negative $2.33 will tumble to negative $2.65.

Free cash flow isn't a prominently featured metric in company financials and earnings releases, but we think it's telling because it accounts for all operating and capital expenses, making it tough to manipulate. Cash is king.

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 126%, meaning it lit $126.22 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 $421 million of cash in Q3, equivalent to a negative 27% margin. The company’s cash burn slowed from $1.15 billion of lost cash in the same quarter last year.

Companies with more cash than debt have lower bankruptcy risk.

Rivian is a well-capitalized company with $7.09 billion of cash and $4.97 billion of debt on its balance sheet. This $2.12 billion net cash position is 14% of its market cap and gives it the freedom to borrow money, return capital to shareholders, or invest in growth initiatives. Leverage is not an issue here.

We were impressed by how significantly Rivian blew past analysts’ revenue expectations this quarter. We were also glad its EPS outperformed Wall Street’s estimates. On the other hand, its EBITDA missed and its full-year EBITDA guidance was in line with Wall Street’s estimates. Zooming out, we think this was a mixed quarter. The stock traded up 3.1% to $12.89 immediately after reporting.

Updated: December 4, 2025 at 10:29 PM EST

Are you wondering whether to buy Rivian or pass? We urge investors to not only consider the latest earnings results but also longer-term business quality and valuation as well.

There’s plenty to admire about Rivian. First off, its revenue growth was exceptional over the last three years. And while its projected EPS for the next year is lacking, its rising cash profitability gives it more optionality. On top of that, its expanding operating margin shows the business has become more efficient.

Rivian’s forward price-to-sales ratio is 3.5x. Looking at the industrials landscape right now, Rivian trades at a pretty interesting price. If you’re a fan of the business and management team, now is a good time to scoop up some shares.

Wall Street analysts have a consensus one-year price target of $14.83 on the company (compared to the current share price of $18.03).