Valued at a market cap of $22 billion, electric vehicle manufacturer Rivian has underperformed the broader markets in recent years.
Down 80% from all-time highs, the EV maker beat Wall Street revenue consensus estimates in Q2 and surprised investors with a lower capital spending forecast.
For Rivian (RIVN), the announcement comes at a pivotal moment as its second vehicle, the R2, starts reaching customer driveways.
Rivian cuts 2026 capital spending guidance
Rivian lowered its 2026 capital expenditure guidance to a range of $1.7 billion to $1.8 billion, down from an earlier forecast of $1.95 billion to $2.05 billion.
The company also narrowed its expected adjusted losses to between $1.8 billion and $2 billion, tighter than its prior range of $1.8 billion to $2.1 billion.
Rivian pointed to project efficiencies and better spending timing as the reason for the $250 million reduction at the midpoint.
Notably, the company still confirmed its delivery target of 65,000 to 70,000 vehicles for the year, a number it had already raised earlier this summer.
According to CNBC, in Q2:
- Rivian reported revenue of $1.66 billion, above estimates of $1.51 billion.
- The company’s adjusted loss of $0.47 per share also beat estimates of a loss of $0.63 per share.
Rivian reported $179 million in gross profit for the quarter, a sharp turnaround from a $206 million loss during the same period last year.
The total included a $36 million loss from the automotive segment and a $215 million profit from software and services.
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A focus on the R2 model launch
Rivian began shipping its R2 model to customers in June, and the vehicle is central to almost everything the company is trying to prove this year. Priced well below the R1 lineup, R2 is designed to pull in buyers who have never owned an EV before.
CEO RJ Scaringe said the response so far has exceeded internal projections. “We’ve been really encouraged by the conversion of reservations to orders on our launch edition,” he explained during the earnings call.
Scaringe added that the rate has come in “meaningfully higher than what we expected.”
That demand signal matters because Rivian is still working through a costly production ramp.
Related: Piper Sandler turns heads with bold Rivian stock prediction
Chief Financial Officer Claire McDonough explained that the second quarter only captured about two-thirds of a quarter’s worth of R2 production costs, since the vehicle only recently moved from preproduction into full manufacturing.
“As we look ahead to the third quarter, we’ll have a full quarter’s impact of the ramp,” McDonough said, noting that a second production shift will also add labor costs before benefits from scale show up in the fourth quarter.
Rivian produced 12,613 vehicles and delivered 12,194 during the quarter, topping its own guidance.
Automotive revenue climbed 23% year over year, helped by a 14% rise in deliveries and a $103 million boost from regulatory credit sales.
Rivian competes with Tesla in the EV market
Tesla remains the dominant force in the U.S. EV market, selling far more vehicles at a much larger scale. But Rivian is carving out its own lane rather than competing head-to-head on volume.
Its R1 trucks and SUVs target adventure- and outdoor-focused buyers, an audience Tesla has not directly chased.
The Amazon delivery van partnership gives Rivian a commercial fleet business that Tesla largely lacks, with more than 40,000 Rivian vans now active in Amazon’s network.
On self-driving technology, Rivian is taking a different technical path than Tesla, building its own chip called RAP1 and pairing it with LiDAR sensors, a sensor type Tesla has avoided.
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Scaringe said the company expects to roll out point-to-point hands-off driving by the end of this year, then hands-off and eyes-off capability in 2027, with full Level 4 autonomy targeted for 2028 through a partnership with Uber.
Rivian also brought in more than $5.3 billion in cash and short-term investments by quarter-end, boosted by a $1.3 billion stock sale in July.
That cushion, combined with a Department of Energy loan tied to its Georgia factory, gives Rivian room to keep investing in autonomy, even as it tightens spending elsewhere.
Whether that balance between discipline and ambition pays off will likely become clearer as R2 production scales through the back half of the year.
Is RIVN stock undervalued?
According to consensus estimates data from TIKR, Rivian is projected to increase revenue from $5.39 billion in 2025 to $32 billion in 2030.
It is forecast to report a free cash flow of $2 billion in 2030, compared to an outflow of $1.64 billion last year.
If RIVN stock is priced at 25x forward FCF, it could more than double within the next four years.
Out of the 16 analysts covering Rivian stock, five recommend “Buy,” seven recommend “Hold,” and four recommend “Sell.” The average Rivian stock price target is $17.56, 15% above the current trading price.
Related: Why Morgan Stanley won’t call Rivian a buy despite upgrade
