Rivian's R2 Has Arrived. Is Now the Time to Buy the Stock?

Rivian Automotive (NASDAQ: RIVN) hasn't been a good stock to own in recent years. Since it went public in late 2021, it has plummeted more than 80% in value, as investors haven't been convinced of its growth story. Its poor financials also haven't helped things, either.

Recently, however, the company began shipping its new R2 SUV to customers, and the new vehicle may open up more growth opportunities for the business. Could this be the game changer the electric vehicle stock needs to take off in value, and is now a good time to buy shares of Rivian?

Image source: Getty Images.

A lower-priced vehicle could be great for sales, but poor for margins

Electric vehicles (EVs) aren't typically known for being particularly affordable, which can be an impediment to growing sales for companies in this space. That's why the launch of the R2 is so significant for Rivian, as it may open the door to reaching a wider range of customers. At around $46,000, the R2's starting price is more affordable than its R1S, which starts at around $77,000.

The downside, of course, is that at a lower price, margins may be squeezed, which isn't great news for a company such as Rivian that already has poor margins to begin with. Over the trailing 12 months, its gross profit was just $57 million on revenue of $5.5 billion. Competition in the EV market has been intensifying, as even Tesla, a leader in the space, has struggled with reduced profitability in recent years.

The stock has been rising recently, but there's no rush to buy right now

Over the past month, Rivian shares have risen about 20% as investors have become more bullish on the stock following the launch of the R2. If the SUV proves popular with consumers and significantly improves the company's financials, there could be considerable upside for the EV stock in both the short and long term.

However, that's also why I don't think there's a rush to buy right now. You might sacrifice some gains by holding off if the R2 proves to be the catalyst that growth investors hope it will be for Rivian, but it's a far safer move, as Rivian still has a lot to prove. And even if you wait to buy the stock after it's proven that the R2 is a big hit, it may still have plenty of room to rise higher.

For now, a wait-and-see approach with Rivian's stock may make the most sense.

David Jagielski, CPA 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.