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Each week, I’ll give an overview of a stock and Licia Leslie will follow that up with a chart analysis the next day. Andrew Giovinazzi will then finish out the week with a volatility breakdown.
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Hey Traders,
Rivian Automotive Inc (Ticker: RIVN) in the last 3 months has had an over $20 range…
Since bottoming out at $15.28 on Jan. 19, the stock has been off to the races, topping out on Friday at 21.44 – a 40% rally off the low.
So what is the outlook for this stock:
Upside for RIVN
The EV space is growing, and right now Rivian does not have a lot of competition in the truck market.
That gives the company a head start.
And with TSLA’s shine having dimmed for many EV buyers, those who were holding out for the Cybertruck may make a turn and look at up-and-comer Rivian as an alternative.
While I do not personally love the look of these vehicles, there is no arguing that these trucks have a unique “vibe” compared to other pickups.
That could be a draw to the truck buyers in places like California.
The company produced 24000 vehicles in 2022 and is going to have to ramp up production. If they can do so efficiently, this would be a prime target to be bought by a company like AAPL if it ever decided to get into the car/truck business.
With a market market cap of $18.26 billion, it is not out of the reach of any of the tech giants if they decided they wanted one.
The stock is sitting on a decent amount of cash, $14.41 dollars per share, and has a book value of $16.65 per share, so despite the big losses, RIVN is not going out of business tomorrow…
Lucid Group, a luxury EV maker, for instance, only has 1.99 of cash per share. That’s much worse.
Downside for RIVN
Now the downside …
This company is burning through cash at breakneck speed!
Starting in 2023, we are going to see a whole host of Big Auto names enter the EV space…
GM and Dodge are coming, and the Cybertruck looms large
As I stated above, TSLA may have lost some of its charm for some people, but that is probably a vocal minority given the units TSLA is moving right now.
This EV maker has a ton of competition coming and I am not sure they are up for it.
The best thing RIVN could do right now is go out and get a buyer …
This is not a stock to own near-term or long-term, and while it could see a rally if the market takes off …
It will likely be met with equity sales to raise cash.
If I owned Rivian (which I do not), I would sell my stock and buy Ford or GM.
I think there is much more upside potential in those names than in RIVN.
Your Only Option,
Mark Sebastian