Every Rivian Investor Should Keep an Eye on This Number

After years of massive sales growth, Rivian Automotive (NASDAQ: RIVN) posted a decline in sales in late 2024. This was the first time in its publicly traded history that the electric vehicle (EV) maker 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 track. That's especially true given we could get major news on this particular number very soon.

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Gross profit is the key metric now

Though 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 decades -- and even over a century.

Its biggest EV competitor, Tesla, was founded in 2003, six years before Rivian. This is huge 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 needed 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 as 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.

RIVN revenue (TTM) data by YCharts; TTM = trailing 12 months.

But gross profitability may be just around the corner. In early 2024, the company said it would achieve positive gross profit 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.

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Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.