Rivian just posted a Q3 beat, exceeding Wall Street's expectations on both revenue and adjusted loss per share. Revenue came in at $1.56 billion against an expected $1.5 billion, and the adjusted loss per share was 65 cents versus the predicted 72 cents. The stock popped over 3% in extended trading, a knee-jerk reaction to numbers that, on the surface, look promising. But let’s dig a little deeper, shall we?
The headline figure is the gross profit of $24 million, a significant swing from the FactSet consensus estimate of a $38.6 million loss. Investors are understandably fixated on gross profit as an indicator of future profitability, before the messy realities of operating expenses, interest, and taxes muddy the waters. However, this "profit" requires some serious unpacking.
Rivian's automotive operations actually posted a $130 million loss. The $24 million gross profit was only achieved because of a $154 million contribution from their joint venture with Volkswagen and their software and services business. That VW deal is doing some heavy lifting here. Are we really valuing Rivian as a software company now? I've looked at hundreds of these filings, and this reliance on JV accounting is unusual. It's not necessarily wrong, but it certainly warrants scrutiny. What happens when the VW deal changes or ends?
And here's the part of the report that I find genuinely puzzling: Rivian reaffirmed its full-year 2025 guidance, including an adjusted earnings loss of $2 billion to $2.25 billion and vehicle deliveries of 41,500 to 43,500 units. They also reconfirmed a gross profit around breakeven, down from earlier projections of a modest profit. So, they beat expectations this quarter, but their outlook hasn't materially changed. Does that inspire confidence, or suggest they sandbagged expectations to clear an artificially low bar? It feels like a magician's trick, diverting your gaze while the real action happens elsewhere.
RJ Scaringe, Rivian's CEO, also stated that the company doesn't anticipate delays to the R2 production timeline due to concerns about rare earth minerals or chips. This is, of course, exactly what you'd expect him to say. But supply chain issues have plagued the automotive industry for years. Are we to believe Rivian is somehow immune? The R2 is slated for production in the first half of next year at their Illinois plant. They ended Q3 with $7.7 billion in total liquidity, including nearly $7.1 billion in cash, which Scaringe claims positions them "really well" for the R2 launch. Rivian: A Brand That Is Staying Top Of Mind Ahead Of R2 Launch (RIVN)
But "really well positioned" is subjective. Launching a new vehicle (especially a mid-size one aimed at a broader market) is an incredibly capital-intensive undertaking. That $7.1 billion will evaporate quickly. And while Scaringe downplays potential supply chain disruptions, the global geopolitical landscape is anything but stable. Tariffs, trade disputes, and regulatory policy (as Scaringe himself acknowledges in the shareholder letter) could easily throw a wrench in the works. The question isn't just can they launch the R2 on time, but at what cost? And will consumers even want it at the price point Rivian needs to survive?
Rivian's Q3 "beat" is a carefully constructed narrative, built on accounting maneuvers and optimistic projections. The market is rewarding them for it, at least in the short term. But the underlying fundamentals – the actual profitability of building and selling cars – remain shaky. Until Rivian can consistently generate gross profit from its automotive operations without relying on JV magic, I'm not buying the hype. This feels less like a sustainable business and more like a high-stakes gamble.
