Rivian Is On Sale for Long-Term Investors, But It’s Not for Everyone


Investors in Rivian Automotive (NASDAQ:RIVN) stock have not had much to celebrate since electric vehicle (EV) group went public on Nov. 10, 2021. At the time, RIVN stock began trading at an opening price of $106.75, while the company raised $13.5 billion from its initial public offering (IPO). And despite precipitous declines, this could be an interesting long-term bet for some investors. 

The back of a silver Rivian (RIVN) pick-up truck.

Source: Miro Vrlik Photography / Shutterstock.com

Rivian is a pre-revenue electric pickup truck and sport utility vehicle (SUV) manufacturer, backed by Amazon (NASDAQ:AMZN). Such a high-profile partnership initially pushed RIVN stock to a record high of $179.47 on Nov. 16.

Now shares are around $70.80, implying a decline of 33% since that first day. Meanwhile, its market capitalization (cap) stands at $63 billion. 

Investors wonder whether RIVN stock could soon once again go over $100, and even reach new record highs. Given that a busy earnings season is starting on Wall Street, Rivian shares are likely to remain volatile in the coming weeks. In fact RIVN stock could decline further if other EV names were to report metrics that investors do not like. Yet, if you are an investor with a two-to-three-year horizon, you could consider buying the dips in Rivian Automotive stock.

How Q3 Earnings Came

Recent metrics highlight that the global EV market is forecast “to grow from USD 287.36 billion in 2021 to USD 1,318.22 billion in 2028 at a CAGR of 24.3% in the 2021-2028 period.” As a result, Wall Street pays close attention to EV companies that could take a slice of this juicy growth.

Rivian released Q3 figures on Dec. 16. Management noted the group delivered its first R1T pickup truck and R1S SUB in September and December. It has also finalized the sales certification process for its Electric Delivery Van (EDV).

While revenue for the quarter was $1 million, net loss hit $1.23 billion. Research and development of -$441 million and selling general and administrative expenses of -$253 million weighed on the bottom line. Cash flow for the period was negative $1.15 billion.

Management also announced that the company expects to come a few hundred vehicles short of its 2021 production target of 1,200. This revision created further pressure on Rivian shares.

Prior to the release of the quarterly results, RIVN stock was around $115. Then, on Jan. 6, came $75.13. Now shares are close to $70.

Adding Rivian Stock To Portfolios

Among 16 analysts polled, RIVN stock has a buy rating. Also, the consensus of 13 analysts for the 12-month median price target stands at $130, implying an upside potential of over 70% from current levels. The 12-month price estimates currently range between $90 and $170.

Long-term investors who are not concerned about short-term choppiness in Rivian stock could consider investing around these levels. Their price target should be analysts’ estimate of $130.

Others who are interested in Rivian Automotive but want to diversify some of the risks away could buy an exchange-traded fund (ETF) that holds RIVN as well.

Examples include the First Trust US Equity Opportunities ETF (NYSEARCA:FPX), the iShares Self-Driving EV and Tech ETF (NYSEARCA:IDRV), the Renaissance IPO ETF (NYSEARCA:IPO), and the Simplify Volt RoboCar Disruption and Tech ETF (NYSEARCA:VCAR).

The Bottom Line on RIVN Stock

Electrical vehicle producer Rivian stock is down over 30% year-to-date. Despite the recent volatility and downward trend, Wall Street expects shares to recover in the coming quarters.

Therefore, long-term investors could consider buying the dips in shares. That way they could look past the short-term gyrations. Alternatively, they could consider investing in an ETF that holds RIVN shares.

On the date of publication, Tezcan Gecgil 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.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.

Tezcan Gecgil, PhD, began contributing to InvestorPlace in 2018. She brings over 20 years of experience in the U.S. and U.K. and has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Publicly, she has contributed to investing.com and the U.K. website of The Motley Fool.

Article printed from InvestorPlace Media, https://investorplace.com/2022/01/rivian-is-on-sale-for-long-term-investors-but-its-not-for-everyone/.

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