Rivian Automotive (NASDAQ:RIVN) investors finally got some good news this year – an agreement with a famous automaker. Unfortunately, the positive news already is priced in to Rivian stock. Indeed, they probably went overboard with their buying spree.
You also can’t afford to just ignore the U.S. presidential election, even though it doesn’t need to be your main focus. The presidential race is relevant to Rivian Automotive, regardless of personal beliefs. It’s risky to hold Rivian shares in 2024’s second half.
Volkswagen Deal Is Already Baked Into the Pie
If you’ve been paying attention to the news pertaining to Rivian Automotive, you’ve surely learned by now that Volkswagen (OTCMKTS:VWAGY) plans to invest up to $5 billion in Rivian. More recently, there’s an addendum to this story.
Reportedly, German authorities gave Volkswagen the green light to form a joint venture with Rivian Automotive. Operations for this JV are expected to commence in this year’s fourth quarter.
As you might expect, Rivian stock investors are really excited about this news. Never mind the fact that Rivian Automotive continues to post one loss-making quarter after another.
Also, investors are expected to conveniently ignore the fact that not just one, but two key Rivian executives recently notified the company of their resignations.
Besides, any expected benefits of the Volkswagen-Rivian JV have probably already been accounted for in the share price. Remember, when Volkswagen previously announced its plans to invest up to $5 billion in Rivian, this was done with intentions to form a JV.
Thus, the JV is certainly not a surprise to anyone by now. This helps to explain why Rivian stock doubled from $8.50 in April to $17 in July.
The market didn’t just sit around and wait for the Volkswagen-Rivian JV to be approved. Forward-looking investors went ahead and bought shares first and then asked questions later.
It’s About Risk, Not Political Predictions
In other news, the election race between former President Donald Trump and current Vice President Kamala Harris is heating up. A recent poll indicates a tie between two candidates. This could change at any moment, however.
Here’s an investment concept to consider: it’s perfectly fine to wait out periods of uncertainty before making an investment. After all, there’s no need to put your hard-earned capital at risk unnecessarily.
Perhaps bigger automakers will be fine regardless of who ends up in the White House in 2025. Rivian Automotive is definitely not a bigger automaker, though. As a consistently unprofitable startup business in a fiercely competitive EV market, Rivian is particularly vulnerable.
We’re not in the business of trying to predict election outcomes. Rather, we’re only trying to alert Rivian Automotive’s prospective investors to the risks.
As InvestorPlace contributor Josh Enomoto observed, Trump “threatened to roll back the Biden administration’s green energy initiatives, which includes EVs.”
Trump’s reelection could impact Rivian Automotive as Legacy automakers gain relevance.
No Need to Endanger Your Portfolio With Rivian Stock
The risk-to-reward just isn’t favorable now for Rivian Automotive’s investors. The market already anticipated the Volkswagen-Rivian deal, so don’t try to be clever. You can’t front-run the benefits of the Volkswagen-Rivian JV now, as the market already did this a while ago.
Moreover, Rivian Automotive is an income-negative startup that would be vulnerable if Trump regains the presidency. With these risk factors in mind, we’re assigning Rivian stock a “D” grade and aren’t recommending an investment today.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.
