What would it take for electric vehicle (EV) manufacturer Rivian Automotive (NASDAQ:RIVN) to get back in the driver’s seat on Wall Street? A better-than-expected earnings report should do the trick. Yet, RIVN stock actually fell even though Rivian Automotive’s quarterly results were pretty good — but that’s why there’s a potential buying opportunity in the cards.
Not long ago, when the Rivian Automotive share price was above $25, I recommended that prospective buyers should wait until the stock drops below $20. I’m sticking to that strategy, and soon you may have the chance to invest in Rivian Automotive at a great price.
RIVN Approaches the Buy Zone
When RIVN stock quickly slid from $25 to $21.50 recently, some onlookers might have assumed that Rivian Automotive’s second-quarter 2023 results were terrible. In actuality, however, Rivian’s numbers weren’t bad at all.
Still, I want the share price to pull back some more. I don’t just want a good price; I want a great one. That way, I’ll have a bigger margin of safety.
Overall, I’m more bullish about RIVN stock than I’ve been in a while. That’s because Rivian Automotive is improving in many ways. For example, Rivian produced 13,992 vehicles and delivered 12,640 vehicles in Q2 2023. In the year-earlier quarter, the automaker only produced 4,401 vehicles and delivered 4,467 vehicles.
That’s a massive improvement, you must admit. Furthermore, Rivian Automotive raised its full-year 2023 vehicle production guidance to 52,000. Previously, the company had guided for 50,000 produced vehicles.
Rivian Automotive Beats Wall Street’s Estimates
It’s entirely possible that profit takers caused RIVN stock to drop post-earnings-announcement. This doesn’t detract from Rivian Automotive’s impressive quarterly results.
I already mentioned Rivian’s operational results, but the automaker’s financial data points were also surprisingly positive. Don’t get the wrong idea — Rivian Automotive isn’t profitable yet. However, the company is improving in this area.
In Q2 2023, Rivian Automotive generated $1.1 billion in sales, which was in line with the analysts’ consensus estimate. In the year-earlier quarter, Rivian’s sales amounted to $95 million, so there’s a positive trend here.
Moreover, Rivian’s per-share earnings loss of $1.08 was much better than the per-share loss of $1.43 that Wall Street had expected. Additionally, this bottom-line result showed improvement over the $1.62 per-share loss that Rivian Automotive had reported in the year-earlier quarter.
RIVN Stock: Start Accumulating Below $20
Operationally and financially, Rivian Automotive performed well in the second quarter. I suspect that profit taking may be responsible for the recent decline in the Rivian Automotive share price.
Still, I would only want to invest in Rivian Automotive when the price is right. Therefore, I’m still bullish on RIVN stock for the long term but only recommend accumulating shares below $20.
And if you’re an options trader, you might consider selling a put option with strike price of $20. The option’s expiration date could be anywhere from 30 to 60 days out from today’s date. Or, feel free to keep it simple and just buy Rivian Automotive shares at $20 or less.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.