Rivian’s Ambitious Road Map Should Put It on the Fast Track

Would you believe that the shares of California-based Rivian Automotive (NASDAQ:RIVN) just traded below their initial public offering (IPO) price? It’s true, and that fact might scare some traders away from RIVN stock.

Rivian sign outside the company's HQ in Silicon Valley

Source: Michael Vi / Shutterstock

Granted, it’s sometimes a bad sign when stocks fall below their IPO prices. On the other hand, the decline of RIVN stock could also represent a prime buying opportunity for enterprising investors.

Don’t get me wrong. RIVN stock isn’t for everyone because Rivian is unloved on Wall Street, and the company certainly isn’t the only electric vehicle (EV) start-up.

Yet, despite the fierce competition in the EV sector and the sagging share price, Rivian’s business appears to be making progress. Indeed, there may be a mismatch if the price of RIVN stock is low even while Rivian marks milestones and continues to invest in EV technology.

A Closer Look at RIVN Stock

On Nov. 9, 2021, Rivian priced its IPO at $78 per share. That price was above the IPO’s preannounced range of $72 to $74, which had previously been raised. The company’s stock officially opened for public trading at $106.75 on Nov. 10.

Amazingly, after Rivian went public, RIVN stock rose for five consecutive trading days. On Nov. 16, its share price topped out at $179.47.

It was all downhill from there, unfortunately. The trouble started on Nov. 17, when Rivian’s shares tumbled by as much as 18% in a single trading session.

Fast forward to Jan. 20, 2022, and the price of RIVN stock was below $70 and therefore below its IPO price.

Is this a problem or an opportunity? Optimists might view the situation as a second chance to buy Rivian’s shares at a very reasonable price point.

Of course, not everyone is an optimist when it comes to Rivian. So let’s see if we can convert some skeptics into believers.

Big Plants, Big Ambitions

In order to meet the robust demand for clean-energy vehicles, automakers must have the necessary production infrastructure in place.

Thankfully, Rivian is heeding the demand for bigger and better vehicle production capacity in 2022. For one thing, the company plans to increase the annual production capacity of its Normal, Illinois factory from 150,000
to 200,000 vehicles.

Yet that plant could be dwarfed by Rivian’s second U.S. production facility which is currently being built. The company says that it’s investing $5-billion in this Atlanta site that is poised to become a “carbon-conscious campus.”

If everything works out as planned, this “campus” will eventually employ more than 7,500 workers and be capable of producing up to 400,000 vehicles per year.

This development is exciting, but Rivian’s stakeholders will need to be patient. While construction on the facility is expected to commence this summer, it is not slated to start producing EVs until 2024.

Major Milestones

Some people might consider getting listed on the Nasdaq exchange to be a notable achievement for Rivian, and they might be right about that.

However, this isn’t Rivian’s only recent milestone worth reporting. In a recent press release, the automaker stated that it had managed to break the 1,000-vehicle production barrier before the end of 2021.

To be more precise, Rivian produced 1,015 vehicle in 2021. Moreover, the company delivered 920 vehicles last year.

In addition to all of that, Rivian reported a million-dollar milestone that suggests the company could evolve into a sales juggernaut.

“Through our first customer deliveries of 11 R1Ts, we generated total revenue of $1 million for the three months ended September 30, 2021,” Rivian declared in a  letter to its shareholders.

The Bottom Line

If your only focus is the momentum of RIVN stock, then you might be deterred from taking a bullish position in the shares.

There’s more than one side to every story, though. The stock’s downturn could represent a chance to invest in the EV maker at a significant discount.

Besides, Rivian is a fast-growing company with bold ambitions. So feel free to consider taking a bullish position in RIVN stock.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.


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