SHOULD YOU TAKE A GAMBLE ON RIVIAN AUTOMOTIVE STOCK? 

 

SHOULD YOU TAKE A GAMBLE ON RIVIAN AUTOMOTIVE STOCK?  

RIVIAN TRUCK FRONT INTERIOR

Rivian designs and manufactures Electric Vehicle (EV)-powered trucks and SUVs. As of October 31, 2021, the company delivered about 156 R1Ts trucks, the company’s main product. Most of the 156 trucks produced went to employees.   Management plans to start selling SUVs by December 2021. 

RIVIAN TRUCK PASSENGER REAR SEATS

NOT CURRENTLY A BUYER OF RIVIAN AUTOMOTIVE {RIVN} STOCK 

Rivian’s stock launched on November 10, 2021. Approximately 153 million shares sold at an offering price of $78.00 to the lucky and already wealthy investors.  The shares began trading on the Nasdaq at $106.75.  With ONLY 156 trucks produced Rivian is valued at over $100 Billion.  General Motors will produce about 2.5 million vehicles (in U.S. and Canada) in 2021 and has a valuation of ONLY $92 Billion.

SHOULD YOU TAKE A GAMBLE ON RIVIAN AUTOMOTIVE STOCK?  

RIVIAN AUTOMOTIVE PROS:

SUPPORTED BY TWO DEEP POCKET PARTNERS: Amazon owns 20% in the company. Amazon also ordered 100,000 electric vans. Ford Motors holds a 12% stake. Ford invested $500 Million as an early investment. That invested is worth ~$10 Billion today.

CURRENTLY EXPANDING MANUFACTURING: Today’s manufacturing capacity is 150,000 vehicles per year at its plant in Normal, Illinois.   Rivian has two planned additions to that facility that will expand its footprint to a total of 3.9 million square feet. Rivian has budgeted $5 billion for a second factory in the Dallas-Fort Worth area of Texas, which would produce 200,000 vehicles per year. The company hopes that the electric van purchase from Amazon is just the opening purchase in what could be a stable and profitable fleet vehicle manufacturing program.

AMERICA’S SWEET SPOT: Thirty percent of US new vehicle sales are trucks and SUVs.

US FEDERAL GOVERNMENT PUSHING ELECTRIC VEHICLES: Joe Biden will announce a new national target for electric vehicles to make up half of all new vehicle sales by 2030.

RIVIAN AUTOMOTIVE CONS

YUGEEEE VALUATION: Rivian’s valuation is greater than $100 billion compared to General Motors, valued at $92 billion, or Ford, valued at $78 billion. Rivian expects to deliver about 1,000 vehicles in 2021.

MANUFACTURING IS HELL:  Rivian burned through nearly $1 billion in the first half of 2021 and expects to drop another $1.28 billion for the third quarter.  The company needs to rapidly ramp up production capacity and produce a quality vehicle. 

MULTIPLE WELL FINANCED COMPETITORS:  Rivian is currently selling two models: the R1T pickup truck, which starts at $67,500, and the R1S SUV, which starts at $70,000. 

  • Ford’s F-150 Lightning in spring 2022, 
  • G.M.’s electric Chevy Silverado in late 2023, and 
  • Tesla’s Cybertruck sometime in 2022. 
  • Both the Cybertruck and F-150 are expected to be priced at less than $40,000 for base models. 
  • Volkswagen, Toyota, and others will also compete for market share as they bring new E.V. offerings in the coming years.

SIGNIFICANT SALES OF SHARES ~180 Days: Many pre-IPO investors are allowed and will sell RIVN STOCK 180 days after the IPO. 

IPO’s CAN DO THREE THINGS AFTER LAUNCHING: UP; DOWN OR SIDEWAYS 

While a minority of IPO stocks keep going up after launch, others go up and then return to earth.  Those that drop in price, can either stay flat, drop further, or rebound upward.  

EXAMPLE: AIRBNB DECEMBER 2020 IPO

December 9, 2020, AirBNB’s IPO launch price was $68.00 per share, BUT opened for trading on the Nasdaq at $146.00 per share, jumping sharply above its initial public offering price as TRADERS snapped up shares of the newly public company. By February 2021, the shares reached a high of ~$220.00.  By June 2021, the stock dropped back to ~$140.00 per share and today is approaching it’s previous high.

EXAMPLE: SNOWFLAKE SEPTEMBER 2020 IPO

September 16, 2020, Snowflake priced its IPO at $120.00.  The stock began trading at $245 per share and closed at $253.93 the first day of trading!  As the above chart shows, the price dropped below $225.00 in May 2021 and has rebounded to ~$386.00

CONCLUSION: SHOULD YOU TAKE A GAMBLE ON RIVIAN AUTOMOTIVE STOCK? 

Rivian’s risk is too high today with many unknowns.  With that said, the stock may be a good investment today for Traders. I added Rivian to my watch list and will study quarterly reports, and price moves. Especially after the 180-day lockup period expires, allowing early investors to sell and take their profit.  

Because Amazon and Ford back the company, it is unlikely to fail.  The company will experience the typical problems moving to mass manufacturing and may need to hire more manufacturing talent.  If Biden passes his planed next Multiple Trillion Dollar Package, and it includes up to $12,000.00 cash rebates for EV’s this WOULD serve as another catalyst. 

If any questions, drop me a note in comments. 

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I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an N.C. State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.

I left a corporate career because I desired to make a difference as a speaker and writer. I was blessed to be coached and mentored by strong women and men in my family and professional life.  It is my time to serve and give back.

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I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, real estate and am happy to share my finance and investment lessons.  I am NOT a licensed financial advisor.  Please do not construe my suggestions on this blog as recommendations for your situation.As an investor, you must establish your risk/loss tolerance. Investment in any asset involves risk, including complete loss. 

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This blog will provide, information and simple strategies, that will assist you to achieve YOUR financial objectives and long term targets. For over 30 years, I solved multi-million dollar problems, for Fortune 10-250, companies. My formal education includes: Business, Finance and Chemical Engineering {Problem Solving} at: Harvard, Rutgers and North Carolina State. And an additional 30+ years, managing my family’s investment decisions. I currently manage/advise people with net-worths ranging from the tens of thousands to several million dollars.

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