RIVN // Orange 2 // Strike Price = {subscribe}
10/y CAGR = TBD … IPO Nov 10, 2021 at $78 (or $106.75 for us retail investor-plebs, because the system is designed to take our money – think thrice before FOMOing into the next hyper, hyped-up IPO)
// WHY BUY
We are now in all-time low territory and mean reversion is in the cards. If RIVN can CAGR at 40% over the next 5 years, $1000 turns into $5378 vs approx $1600 for the S&P 500 @ 10% CAGR. Slightly different risk profiles mind you. This is a small bet stock at this point until more of the story unfolds. Can they scale production, get margins positive so as not go bankrupt or get bought out? And how much stock dilution is likely before attaining profitability in 2028 (current analyst estimates)? But we do like their trucks – a lot – despite some issues they have had with early vehicles (to be expected, growing pains). Sandy Munro and Co also seem to give them their stamp of approval. But we would still rather own a Cybertruck. Or an F-150 ⚡️If we need to regularly haul gravel or lumber or old fridges and what not.
// ChatGPT: WHY BUY … ?
As an AI language model, I cannot provide financial advice … conduct your own research and consult with a licensed financial advisor before making any investment decisions.
However, I can provide some general information about Rivian, a company that is focused on manufacturing electric vehicles, including SUVs and pickup trucks.
Rivian has gained a lot of attention from investors and the public due to its innovative technology, strong leadership team, and the increasing demand for environmentally friendly transportation. In addition, the company has secured significant investments from major companies such as Amazon and Ford.
// GGI CONCLUSION
They expect 85K units in 2024 and be gross profit positive. EPS positivity could be more like 2028. Added a $1.3B green convertible note offering on Mar 6, 2023 dealing a solid right hook to the jaw of RIVN. If the risk profile doesn’t bother you and you have patience to await profitability, this offering could provide a good low entry point for a tranche of the vehicle of the weekend warrior class. Rivian can make a great EV pick-up truck (R1T) and SUV (R1S) –- and delivery van? — but can they make a lot of them? Elon says ramping up production is the hardest part; he slept at the factory for a year while Tesla ramped up Model 3 production and came within a hair of insolvency. Does CEO-Founder Scaringe have that kind of grit and determination? In the short-term, have they set themselves up for some layup earnings call beats in 2023? This could be good for the stock price coming off these lows and they have a compelling product. A short-term volatility play for those so inclined to speculate. Long-term investors will likely have a fantastic cost-basis if they buy at this point, given Rivian survives, but patience will likely be required to reap those rewards as CAGRs aren’t necessarily evenly applied. (E.G. Tesla stock was in the doldrums for several years before its stock went up and away in 2020.)
// CATALYSTS
2023 guidance of 50K units but should beat that, supply chains and vicissitudes willing, as analysts had been calling for guidance of 62K // Full annual capacity at the Normal, Illinois factory expected to be 150K units // Lower cost R2 line so customers can get the $7.5K IRA // Expect a long-term vehicle gross margin of 20%
// RISKS
Production delays, except maybe from factory expansion renovations // $11.6B on the balance sheet ending 2022 but that number was $18.1B ending 2021; that’s some burn rate // That cash should see ‘em through 2024, but then what — stock D I L U T I O N one would presume
// NEWS & COMMENTS
Mar 7, 2023
SA // buy: Rating Upgrade After Reports Of Outperforming Forecasts
While I went against the bulls consensus before, I now am against the general bears consensus on Rivian’s 2023 outlook. I believe the market has overreacted to their delivery updates and Rivian will provide good news in the next few quarters.
// GGI 💬
We agree, but their EPS could be deep in the red for a few years, not just quarters. There could be money to be made on them in short term spurts, but they will likely be sold hard whenever the market gets curmudgeonly.
Mar 1, 2023
SA // sell: Set For New Lows
While the Rivian Automotive, Inc. balance sheet is a huge asset for the EV firm, slowing growth is likely going to be reflected in a falling revenue estimates and potentially in a lower valuation multiplier. Since the market reacted very harshly yesterday, I believe Rivian Automotive, Inc. is set to re-test its 1-year low at $15.79 in the short term!
