Rivian Just Raised Its 2026 Outlook While Tesla Stock Stumbled. Is the Electric Vehicle Underdog Finally a Buy?

Rivian (NASDAQ: RIVN) just gave investors an impressive update. On Thursday, the electric vehicle maker said it delivered 12,194 vehicles in the second quarter, comfortably above its own outlook of 9,000 to 11,000, and raised its full-year delivery target to 65,000 to 70,000 vehicles, up from 62,000 to 67,000.

The stock jumped more than 8% on the news. And the timing sharpened the contrast: Tesla fell about 7.5% the same day following its own delivery report.

Rivian shares have now climbed about 60% from their 52-week low, though they still sit slightly below where they started the year. So, has the underdog finally earned a spot in more portfolios, or is the market right to stay skeptical?

Image source: The Motley Fool.

What the raise actually says

The second quarter update begins to answer a question that has hung over Rivian all year: Can the company build and sell its new, lower-priced R2 alongside everything else it makes? Or will it cannibalize the company's sales of other vehicles and ultimately hurt its business?

The R2 matters more than any other vehicle Rivian has made. The company's R1 trucks and SUVs are premium-priced machines with a naturally limited audience. The R2 is Rivian's bid for volume, and a raised outlook one quarter into its ramp suggests the early demand is there.

But it looks like the vehicle will be additive to its business. Rivian delivered 10,365 vehicles in the first quarter and 12,194 in the second, for 22,559 in total. This means that reaching even the low end of the new full-year range requires about 42,000 deliveries in the second half -- nearly double the first-half pace. This spike in second-half deliveries would be Rivian's steepest ramp in history, executed in the same six months the company is scaling an entirely new model.

The economics still have to catch up

Whether the stock works from here likely depends less on delivery counts than on what each delivery earns. And that picture is still mixed.

In the first quarter, Rivian's revenue rose 11% year over year to $1.38 billion, and the company generated $119 million in gross profit, a 9% gross margin. But the composition tells a more complete story. The software and services segment produced $181 million in gross profit, while the automotive segment ran a $62 million gross loss, hurt primarily by a $100 million year-over-year decline in sales of automotive regulatory credits and lower production volumes. In short, the vehicles themselves still lose money, and software and services keep the overall margin positive.

Meanwhile, total company losses remain large.

Rivian's first-quarter operating loss widened to $881 million from $655 million a year earlier, on lower gross profit and higher operating expenses as the company builds toward the R2 era.

None of this is disqualifying for a company at Rivian's stage. Scale is precisely what the R2 is supposed to deliver, and higher volumes could spread fixed costs across far more vehicles.

The bull case is that the second-half ramp pushes automotive gross profit toward positive territory and shifts the conversation from survival to growth. It's unclear, of course, if the company can pull this off.

But the capital runway for the ramp has notably improved recently. In its first-quarter update, Rivian said it raised the initial production capacity planned for its Georgia plant by 50%, to 300,000 vehicles annually, backed by an up to $4.5 billion Department of Energy loan. And a completed testing milestone in March unlocked a $1 billion investment from Volkswagen Group. A steep ramp is much less dangerous with that kind of backing.

The stock's recent run-up, however, has created a new problem. The stock now commands a market capitalization of about $25 billion -- and that's for a company that still loses money on every vehicle it sells.

So, is Rivian finally a buy? The delivery update was arguably the most encouraging news the company has produced in years, and it meaningfully lowers the risk that R2 won't be materially additive to its overall business. But I'd want to see one specific thing before buying: automotive gross profit improving as R2 volumes build. The second-quarter report, due July 30, is the first checkpoint. Until then, Rivian stays on my watch list as a far stronger operation than it was three months ago, but still a show-me stock at this price.

Daniel Sparks has clients with positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.