Is Rivian’s 2025 Valuation Justified After Its 32% Share Price Jump?

• If you are wondering whether Rivian Automotive's recent momentum makes it a bargain or a bubble, you are not alone, and that is exactly what we are going to unpack here.
• The stock is up 32.1% year to date and 27.2% over the last year, even after a modest 0.2% dip in the past week and a 6.6% gain over the past month, signaling shifting market expectations around its long term prospects.
• Investors have been reacting to a steady drumbeat of news around Rivian's ramp up in production capacity and high profile partnership ecosystem, including its ongoing relationship with Amazon for electric delivery vans. At the same time, headlines about stiff competition in the EV space and industry wide pricing pressure have kept a lid on overly speculative enthusiasm, creating a push and pull in the share price.
• Despite that backdrop, Rivian currently scores just 0 out of 6 on our undervaluation checks. This might surprise investors who see only the recent gains. In the next sections, we will walk through the standard valuation methods we use and then finish with a more complete way of thinking about what the stock is really worth.

Rivian Automotive scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Rivian Automotive Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow (DCF) model estimates what a company is worth by projecting its future cash flows and then discounting them back to today using an appropriate rate. In effect, it asks what those future dollars are worth in dollar terms right now.

For Rivian Automotive, the 2 Stage Free Cash Flow to Equity model starts from negative last twelve month free cash flow of about $442.1 Million, reflecting the heavy investment phase of its growth. Analyst-based projections, extended by Simply Wall St beyond the typical five-year window, still show several years of negative cash flows before turning positive, with free cash flow expected to reach around $1.47 Billion in 2035, or roughly $511.4 Million in today’s dollars after discounting.

Aggregating all projected and discounted cash flows produces an estimated intrinsic value of roughly $2.70 per share. Compared with the current market price, this implies the stock is about 547.5% overvalued on a DCF basis. This suggests that today’s share price already reflects extremely optimistic expectations.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Rivian Automotive may be overvalued by 547.5%. Discover 908 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Rivian Automotive.

Approach 2: Rivian Automotive Price vs Sales

For companies that are still loss making or only just moving toward profitability, the price to sales ratio is often a more reliable yardstick than earnings based metrics. It compares the market value of the business to the revenue it is already generating rather than to volatile or negative profits.

In general, faster revenue growth and lower perceived risk can justify a higher price to sales multiple. Slower growth or higher risk usually call for a lower, more conservative multiple. Rivian currently trades on a price to sales ratio of about 3.68x, which is above both the Auto industry average of roughly 0.87x and the peer group average of around 1.14x, suggesting the market is already factoring in strong growth and execution.

Simply Wall St’s Fair Ratio is a proprietary estimate of what Rivian’s price to sales multiple could be, given its growth profile, profitability trajectory, industry, market cap and risk factors. By incorporating these company specific drivers, the Fair Ratio of about 1.14x provides a more tailored benchmark than a simple comparison with industry or peers. Compared with Rivian’s actual 3.68x multiple, this framework indicates the shares are trading on a rich valuation.

Result: OVERVALUED

PS ratios tell one story, but what if the real opportunity lies elsewhere? Discover 1447 companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Rivian Automotive Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, which are simple stories you create about a company that connect your assumptions for future revenue, earnings and margins to a fair value, and then compare that fair value to the current price.

On Simply Wall St’s Community page, millions of investors use Narratives as an accessible tool to spell out why they think a business like Rivian will succeed or struggle, link that story to a financial forecast, and then see what price those assumptions imply today.

Narratives are dynamic, automatically updating your fair value when new information like earnings, news or guidance comes in, so your investment view can evolve as the facts change instead of being locked to a static model.

For example, one Rivian Narrative might assume the optimistic analyst view, with revenue reaching about $15.7 billion, margins lifting toward 5% and a fair value near $21, while a more cautious Narrative might focus on cash burn, policy risks and pricing pressure, leading to a fair value closer to $7.55, and it is by comparing these stories with the current share price that you decide how Rivian fits into your portfolio.

Do you think there's more to the story for Rivian Automotive? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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