As an investor tracking promising auto startups, Rivian has dominated my research over the past 2 years. This electric pickup/SUV maker went from total unknown to the hottest stock debut of 2021 to a cautionary tale of overhype in the span of just 18 months.
In this comprehensive guide, I‘ll analyze Rivian‘s founding, business model, financials and recent stock volatility to determine: does this ambitious EV company deserve a spot in our portfolios today?
But first, let‘s rewind and relive Rivian‘s dizzying ride since bursting onto the scene in late 2020…
Chapter 1: Rivian 101
Before its blockbuster IPO, Rivian operated largely behind the scenes for over a decade quietly developing electric adventure vehicles.
RJ Scaringe founded Rivian in 2009 to pursue his passion for sustainable transportation after earning a PhD in mechanical engineering from MIT. Scaringe continues to lead the company as CEO.
Initially self-funded for the first few years, Rivian went on to raise over $8 billion in funding from backers including:
- Amazon ($1.3 billion)
- Ford ($500 million)
- T.Rowe Price ($2.5 billion)
- BlackRock ($2.85 billion)
This heavy-hitting investor support speaks to the promise Rivian displayed developing its technology and strategic partnerships pre-IPO.
So What Does Rivian Actually Do?
Rivian focuses exclusively on building battery electric vehicles on its own proprietary skateboard platform.
The Rivian lineup consists of two models initially with more on the way:
R1T Electric Pickup Truck
- Up to 400+ miles EPA range
- 0-60 mph in 3 seconds
- Wading depth of 3+ feet
R1S Electric SUV
- Seats 5-7 passengers
- 300+ miles EPA range
- 0-60 mph in under 3 seconds
Both Rivian models stand out through sleek, adventure-focused designs combining performance, utility and efficiency.
Rivian aims to eventually produce up to 200,000 vehicles per year at its manufacturing plant in Normal, Illinois.
The company also signed a major deal with Amazon for 100,000 custom electric delivery vans by 2030 – securing a huge anchor client.
Positioned as an electric crossover between luxury and rugged utility vehicles, Rivian is targeting an untapped market niche with promising margins.
Chapter 2: Growth Stock Mania Meets Rivian
Rivian tapped into massive IPO demand for high-growth EV plays by going public in November 2021. Here‘s an inside look at the historic offering:
Rivian IPO At-a-Glance
| Metric | Amount |
|---|---|
| IPO Date | November 10, 2021 |
| IPO Share Price | $78 |
| Total Shares Sold | 153 million |
| Gross Proceeds | $11.9 billion |
| Current Market Cap | $22 billion |
Trading under the "RIVN" ticker, Rivian shares rocketed as high as $179 just days after its debut – more than double the IPO price.
Fervor over the first publicly traded EV pickup/SUV maker coupled with Rivian‘s storyline as a homegrown Tesla rival triggered a retail stock frenzy rarely seen.
Besides everyday investors piling in, major IPO backers Ford and Amazon put billions behind Rivian as well – enriching its cash reserves to over $15 billion almost overnight.
But even blockbuster IPOs backed by industry heavyweights can soon lose their luster…
Chapter 3: Growth Stumbles Deflate the Hype
Like many of its unprofitable growth peers, Rivian failed to live up to its near $100 billion valuation set in those early euphoric IPO days.
Let‘s examine what‘s driven shares 75% off highs:
botanical Production Setbacks
The most damaging blows came from Rivian‘s inability to scale manufacturing on schedule. Parts shortages and supply chain chaos triggered several guidance downgrades including:
- Q1 2022: Production guidance slashed from 50K vehicles to just 25K
- Q4 2022: Only produced 10K vehicles versus 40K target
Teething issues are typical in auto manufacturing. But Rivian rattled investors by severely lagging its targets.
wilting Public Perception
Self-inflicted wounds also marred Rivian‘s image.
In March 2022, Rivian shocked customers by abruptly hiking prices 20% on existing reservations to offset surging component costs. Intense backlash prompted a quick reversal – but the damage was done.
Rivian needs flawless execution to maintain its premium brand aura built on trust. Missteps like this open the door for targeted criticism.
drought Growth Environment
Broader market headwinds compounded Rivian‘s slide. With inflation raging and recession looming, investors fled speculative tech names en masse.
In the span of just 6 months after its IPO, Rivan shares collapsed nearly 80% by May 2022.
But growth stories can rebound fast when the market cycle turns…
Chapter 4: Where Next for RIVN Stock?
Down but not out after its nightmare 2022, Rivian Common Stock now hovers around $30.
Recent Results
Deliveries are the lifeblood for any auto startup. By producing over 10K vehicles last quarter, Rivian restored some credibility after operational struggles.
The rebound aligns with improving macro conditions and sentiment towards beaten-down growth stocks.
Investor Sentiment
Is Wall Street regaining faith in Rivian‘s prospects? I surveyed analysts for an updated outlook.
Morgan Stanley sees production ramping to 65,000 vehicles in 2023 before surpassing 400,000 by 2030. They peg Rivian shares reaching $60 in a bull case.
However, Goldman Sachs cautions on lingering cost pressures and market share viability. They rate RIVN a Sell with downside to $15.
Clearly, a wide range of outcomes are still in play.
Valuation Check
With no profits yet, traditional P/E ratios can‘t value Rivian. But we can assess sales multiples.
Rivian trades at a Price/Sales ratio around 10x – well below Tesla (14x) but pricier than Ford (0.4x). This signals strong top line growth is still assumed, albeit at a discount to its larger EV rivals.
Based on a 30% CAGR sales outlook, I believe $30 represents a fair value entry point for Rivian stock today.
Final Thoughts
In my time analyzing the auto sector, I‘ve never encountered a company that‘s been both so beloved and beleaguered in such a brief period as Rivian.
Its differentiated EV pickup has clearly resonated. But scaling production to meet that demand has proven difficult.
Ultimately, I recommend nibbling on Rivian shares at current levels – but size your position appropriately given its still unproven manufacturing metrics and financial profile.
Upside remains if Rivian can execute its 2023 production targets without any hiccups. But competition is coming fast in electric trucks and SUVs from old guard automakers and new entrants alike.
Strap in for the long haul if you invest here – Rivian‘s ride could still get very bumpy on the road ahead!
