As 2023 comes to a close, investors have warmed back up to Rivian Automotive (NASDAQ:RIVN) stock, which has surged back to the low-$20s per share following a November tumble. There is not one set reason this EV play has experienced this latest surge in price. Developments and news that are both company-specific, and more macroeconomic in nature, have both played a role.

But while both these sets of reasons may be sufficient enough to keep shares moving higher for now, it may be a different story pretty soon. Starting early next year, sentiment for RIVN could shift back to bearish. It’s possible that a key company-related issue/concern is becoming important again.

RIVN Stock: Recent Optimism and Still-Present Risks

There have been many factors at play behind this latest Rivian rally. First, the company has been the recipient of positive analyst coverage. On Dec. 7, analysts at Stifel issued a “Buy” rating for shares.

Since upgrading RIVN stock to the equivalent of “Buy” back in October, analysts at Cantor Fitzgerlad, Evercore ISI, and UBS remain bullish as well. There has also been positive news related to Rivian’s prospects as a manufacturer of electric vans. The company just recently announced that it has locked down another big ticket commercial-fleet customer for these vehicles.

Alongside these company-specific positive developments, a key positive macro development has emerged as well. There’s now even greater suggestion that the Federal Reserve will begin lowering interest rates in 2024.

Besides being a positive for growth stocks like RIVN, lower interest rates may bode well for EV demand, which, as you may have heard, is currently in a slump.

Then again, maybe not, which brings us the core of my bearish view on RIVN. While there may be a path for the “EV slump” to ease next year, this may not save the day. It all has to do with the company-specific headwind hinted at earlier.

Worries About Profitability/Dilution Could Crop Back Up

Now back up close to the $25 per share price levels, again a continued rally for RIVN stock isn’t out of the question, and not only for the aforementioned reasons.

While not for certain, it’s possible that investors are cycling out of lower-quality early-stage EV plays, like Lucid Group (NASDAQ:LCID), and concentrating their “rise of EV” wagers on this stock, which I’ve previously called relatively higher-quality, emphasis on “relative.”

Still, while seemingly shifting well into the bullish column today, a move back to the bearish column tomorrow remains very possible. Renewed concerns about Rivian’s path to profitability, combined with a resurgence in worries related to shareholder dilution, could drive this.

Yes, lower interest rates next year could help quickly end the EV sales slump. However, keep in mind that the same sell-side forecasts calling for Rivian’s sales to jump 42.6% next year also call for just a moderate-sized narrowing of losses (from $4.92 to $3.37 per share).

As argued previously, persistent high losses point to a greater level of shareholder dilution in the future, as the company needs to both absorb these losses, plus continue to invest billions to scale up its production capacity.

Bottom Line: Don’t Buy into This Latest Rally

Rivian is next expected to release quarterly results/updates to guidance in late February. While announcements like Q4 2023 delivery numbers may help to sustain the stock in January, come February, the company’s current profitability numbers/guidance on future profitability could reignite focus on this issue.

Worse yet, remember that the “Fed pivot” isn’t guaranteed. Without lower rates, EV demand growth may not recover. Rivian’s top line growth next year could come up short relative to the sell-side community’s 42.6% forecasts.

Hence, it may be within the realm of possibility that losses widen instead of narrow next year. Given this risk of the latest rally not only losing steam, but serving as a prelude to a sell-off, consider it best to skip out on RIVN stock.

RIVN stock earns a D rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.