Rivian (NASDAQ:RIVN) has been facing challenges as its stock has declined from previous highs, raising concerns about its cash burn rate. With substantial cash outflows, there is speculation that the company may face a cash crunch if improvements are not seen soon. Additionally, trading at 2.15x forward sales, Rivian appears pricier compared to the profitable Li Auto.

Investing in Rivian remains risky due to its high cash burn rate and the competitive landscape of the electric vehicle (EV) market. While the company is focusing on operational efficiencies akin to Tesla (NASDAQ:TSLA), the risks associated with Rivian make it a neutral choice for many investors.

Rivian’s performance in Q1 was a mixed bag with earnings per share falling short of estimates and a significant net loss reported. Despite this, the company saw a strong revenue increase of 82.15% year-over-year, driven by higher vehicle production and deliveries. Notably, Rivian’s R1S model emerged as the top-selling EV in the premium segment in the U.S., showcasing strong market demand.

During the quarter, Rivian achieved milestones such as producing its 100,000th vehicle and introducing a new platform for upcoming models. The decision to shift production to Normal, Illinois, is expected to result in significant cost savings. Moreover, securing an $827 million incentive package from Illinois highlights the company’s commitment to expansion and infrastructure development.

As of Q1 2024, Rivian held $7.86 billion in cash and short-term investments, representing a substantial portion of its market capitalization. However, concerns arise due to the company’s cash burn rate, which could lead to financial strain if not managed effectively. Analysts suggest that if the current burn rate continues, Rivian might exhaust its funds within six quarters, emphasizing the need for sustainable financial performance going forward.