After years of massive sales growth, Rivian (RIVN 24.45%) posted a decline in sales in late 2024. This was the first time in its publicly traded history that the electric vehicle (EV) company saw its revenue base drop.
The shift caused the market to question the company's valuation. But in reality, there's an even more important number to be tracking. That's especially true given we could get major news on this particular number very soon.
Gross profit is the key metric now
Despite being founded in 2009, Rivian is still very much a newcomer in manufacturing cars and trucks. Much of the conventional competition has been in business for many decades, sometimes for over a century.
Its biggest EV competitor, Tesla, was founded in 2003, six years before Rivian. This is a huge deal when it comes to scaling up successfully in the automotive market. It can take up to a decade to get a vehicle from the idea phase to production, not to mention the huge amount of infrastructure necessary to manufacture the vehicles themselves.
All of this requires capital -- a lot of it. And Rivian is no exception, especially considering it's aiming to release three new vehicles by 2026, a costly but necessary effort to spur growth.
Unfortunately, it still needs to regularly tap the market for more capital considering it's still losing money on every vehicle it sells. Over the past 12 months, it posted a gross loss of nearly $2 billion. These losses limit its ability to compete and survive. But the end could be upon us.
RIVN revenue (TTM) data by YCharts; TTM = trailing 12 months.
In early 2024, management said the company would achieve positive gross profits by the end of the fiscal year. Three quarters have since gone by, and the company continues to generate gross losses.
But management continues to be confident, reiterating its goal of positive gross profits by February -- the month Rivian will post its next quarterly results. If you're invested in the stock, keep an eye on this number.
