Every Rivian Investor Should Keep an Eye on These 2 Numbers

Rivian Automotive (NASDAQ: RIVN) shares trade at a significant discount to peers such as Lucid Group and Tesla. Yet the electric vehicle (EV) maker's sales have huge growth potential, with a sales inflection point likely occurring within the next 12 months.

But before you jump into this promising EV stock, make sure you understand the two numbers discussed below.

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These numbers will have a huge effect on Rivian's stock

As you can see in the charts below, Rivian shares now trade at just 2.2 times sales -- a considerable discount to competitors like Tesla and Lucid Group.

Yet, the company is expecting to release three new mass market vehicles next year, with production slated for early 2026. These vehicles are expected to be priced under $50,000, crossing a critical price threshold that will make Rivian's vehicles more affordable to millions of new buyers. Right now, its two existing models are priced at $70,000 and above.

When Tesla released its mass market vehicles -- the Model 3 and the Model Y -- its sales doubled or tripled in the years that followed. The same could prove true for Rivian. But why, then, are Rivian's shares priced at such a discount?

RIVN PS Ratio data by YCharts. PS = price-to-sales.

Looking 12 months down the road, Rivian's sales base is actually expected to remain roughly flat, with shares trading at a similar 2.5 times forward sales. So even based on future growth rates, shares are deservedly cheap. But these estimates only include the next 12 months. Rivian's new models are expected to debut just before that time horizon ends, with at least another few quarters needed to see sales reach their full potential.

Right now, the market isn't pricing in much growth for Rivian stock because this growth is expected to occur beyond most analysts' forecasts. That's why investors should keep an eye on both Rivian's price-to-sales ratio and its full-year growth estimates. Once those estimates start to include sales from Rivian's mass market vehicles, we should see the stock's valuation pick up relative to Lucid's and Tesla's valuations.

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