Rivian Gains Massive Subsidy From Georgia. Here’s What to Expect.

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RIVN Stock - Rivian Gains Massive Subsidy From Georgia. Here’s What to Expect.

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The state of Georgia will commit $1.5 billion to Rivian’s (NASDAQ:RIVN) $5 billion new manufacturing plant just east of Atlanta. This is the largest industrial commitment in Georgia’s history, which conveys the state’s belief that Rivian could prosper and generate an abundance of jobs. This investment should also be a boon to RIVN stock.

As part of the package, Rivian has agreed to materialize 7,500 jobs with an average yearly wage of $56,000. Furthermore, Rivian has to make good on its investment by producing approximately 400,000 vehicles per year at the facility, starting in 2024.

What does this mean for RIVIN stock? RIVN stock has suffered a tremendous drawdown since the turn of the year, losing more than 60% of its market value. However, it’s worth considering that systemic risk and early-stage company features are to blame. I have high hopes for RIVN stock as I believe it’s oversold.

First of all, the company has reputable backers that see potential in its concept. The likes of Amazon (NASDAQ:AMZN) and Ford (NYSE:F) are major shareholders who’ve taken on substantial positions in the company. Furthermore, RIVN’s electric SUV concept exhibits product differentiation, meaning that secular growth could be in the cards.

Rivian also shows promise from a quantitative vantage point. For example, its income statement is progressing well with 3.05x annual earnings before tax depreciation and amortization (EBITDA) growth. Additionally, RIVN’s diluted earnings per share (EPS) has surged by 1.27x during the past year, suggesting that residual value could be in the cards.

Lastly, I’m generally concerned for growth investors. However, RIVN stock presents something different. Sure, the growth stock domain is facing all kinds of economic headwinds, but Rivian’s experiencing secular growth. Hypergrowth stocks possess the ability to bypass macroeconomic headwinds, and RIVN’s profile suggests that it could do just that. The stock is trading at a relative strength of only 35.73, meaning that it’s touching the oversold threshold. I’m bullish on this one!

On the date of publication, Steve Booyens did not hold any position (either directly or indirectly) 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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