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Is Rivian Stock a Good Buy?

Investors looking to derive outsized gains in the upcoming decade can add electric vehicle or EV stocks to their portfolios, such as Rivian

The global electric vehicle (EV) market is poised to surpass $2.4 trillion by the end of 2027, growing at an annual rate of over 20% in the next six years. Governments worldwide will continue to support the transition towards clean energy solutions, making stocks such as Rivian Automotive (NASDAQ: RIVN) top bets right now.

Let’s see if you need to invest in Rivian stock today.

The bull case for Rivian

Rivian designs, develops, and manufactures EVs and sells them directly to customers. The company has built a vertically integrated ecosystem that consists of its vehicle technology platform, cloud architecture, product development, and operations.

Rivian launched the R1 platform with its first-generation consumer vehicle called the R1T, a two-row five-passenger pickup truck. The deliveries for these trucks began in September 2021. Rivian has produced 12 R1Ts and delivered 11 R1Ts as of September 2021. At the end of October, it manufactured 180 R1Ts and delivered 156 R1Ts, ramping up production significantly.

In December, it plans to launch and commence deliveries for the R1S, a three-row seven-passenger SUV (sports utility vehicle). By the end of 2021, Rivian aims to deliver 1,000 R1Ts and 15 R1Ss.

But investors are bullish on Rivian’s massive opportunity in the commercial market. Rivian plans to launch its first commercial vehicle or the Electric Delivery Van (EDV) in collaboration with Amazon. In fact, Amazon has pre-ordered 100,000 vehicles globally which is the largest ever single-customer order in the EV space. Rivian expects to deliver 10 EDVs by the end of this year.

In addition to EV production, Rivian also offers an end-to-end centralized fleet management subscription platform called FleetOS. This platform will provide a range of services, including vehicle distribution, software services, connectivity management, and lifecycle management.

The bear case for Rivian

While the long-term prospects for Rivian remain enticing, the company is yet to report any meaningful sales. Rivian was a pre-revenue company until Q2 of 2021 and is still valued at a market cap of almost $132 billion.

In 2019 Rivian reported a net loss of $426 million, and this figure widened to $1 billion last year. 

The company is expected to invest heavily in product development and expand its manufacturing capabilities, which will require massive amounts of capital expenditures. Rivian will have to raise capital several times in the future to fund its expansion plans resulting in shareholder dilution, making it a high-risk bet, given sky-high valuations.

So, should I buy Rivian stock?

Rivian is backed by one of the largest companies in the world, as Amazon has more than a 20% stake in the company. However, given the lack of revenue or earnings visibility, it’s too early to invest in RIVN stock. It makes sense to undertake a wait-and-watch approach for at least two earnings reports before gaining exposure to the EV company.

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Quickfire Round

Did Rivian stock go public?

Rivian stock went public on November 10, 2021.

What is the market cap of Rivian?

Rivian is currently valued at a market cap of $131.94 billion.

How much stake does Amazon own at Rivian?

According to recent SEC filings, Amazon has a 22% stake in Rivian.