Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Rivian Automotive: Is The Dream Of Challenging Tesla Doomed?

By Investing.com (Haris Anwar/Investing.com)Stock MarketsMar 14, 2022 09:41AM ET
www.investing.com/analysis/rivian-automotive-is-the-dream-of-challenging-tesla-doomed-200619915
Rivian Automotive: Is The Dream Of Challenging Tesla Doomed?
By Investing.com (Haris Anwar/Investing.com)   |  Mar 14, 2022 09:41AM ET
Saved. See Saved Items.
This article has already been saved in your Saved Items
 

Shares of electric vehicle maker Rivian Automotive (NASDAQ:RIVN) have been spiraling lower at such a rapid rate that even the company’s most faithful investors are beginning to doubt whether there will be any success in its future.

RIVN Weekly
RIVN Weekly

The Irving, Texas-based startup has lost more than $120 billion in market value in the four months since it went public on Nov. 10, in one of 2021's biggest, most watched IPOs. The stock priced at $78 ahead of its IPO but skyrocketed to $106.75 when it debuted. Currently trading at $38.05, that's a shocking reversal from the post IPO buying frenzy that made Rivian the sixth largest IPO in US market history.

In November, investors were confident that Rivian—which has the backing of Amazon (NASDAQ:AMZN) and Ford Motor Company (NYSE:F), mega cap companies that have a 20% and 12% stake in RIVN respectively—would be one of the most promising startups to challenge Tesla’s (NASDAQ:TSLA) dominance in the EV market.

But barely four months later, Rivian's valuation stands at about $34 billion, when market sentiment turned negative on growth stocks even as supply chain obstacles accelerated and rising inflation continues to hurt current company valuations.

At Friday's $38.05 close, Rivian shares have dropped 79% from its record high of $179.47 hit on Nov. 16.

Last week, the latest evidence of the challenges facing Rivian's ability to ramp production came when the company released its Q4 and full year 2021 earnings report. The company not only missed Wall Street’s expectations, but also forecast just a modest increase in vehicle production for 2022.

Rivian now expects to produce 25,000 electric trucks and SUVs in 2022, just half of the production it forecast last year as part of its IPO roadshow. In a letter to shareholders, Rivian said:

“In the immediate term, we are not immune to the supply chain issues that have challenged the entire industry. Those issues, which we believe will continue through at least 2022, have added a layer of complexity to our production ramp-up.”

Price Targets Cut

Besides the industry-wide supply side challenges auto manufacturers are facing, Rivian also seems to be finding it hard to increase its vehicle prices in order to protect its margins. The company, early this month, was forced to roll back price increases on its debut cars, the battery-electric R1T pickup and its R1S SUV, after customers began canceling their orders.

Since this embarrassing about-face, an array of analysts have cut their price targets on the stock. At least four lowered their price targets just this month—by an average of 40%, according to Bloomberg data. In a note to clients, Barclays analysts on Mar. 8 drastically trimmed their price target on the stock, saying:

“With investors increasingly concerned about Rivian’s production ramp combined with its inability to combat cost inflation with price increases, we have trimmed our price target to $47 from $115.”

Still, the average analyst 12-month price target on Rivian is fairly high. Among 15 analysts polled by Investing.com, it's around $92.

RIVN Consensus Estimate
RIVN Consensus Estimate

Chart: Investing.com

Indeed, 10 analysts rated it outperform with five remaining neutral.

One possible reason for this optimism: despite current problems, Rivian is still considered the best-positioned startup to compete with Tesla in the rapidly growing EV arena. Demand for electric vehicles is likely to remain strong, helped by government subsidies to promote clean technologies and rising oil prices.

That shift, according to many observers, will escalate further amid the ongoing geopolitical conflict which has pushed gas prices to a record high.

Bottom Line

Despite the recent setbacks, we continue to believe that Rivian can still be a successful player in the EV market due to its significant lead in the battery-powered pickup truck segment and the backing of the deep-pocketed Amazon.

But investors should also note that it’s going to be a long road ahead for the company, as it now has to bridge the gap between expectations and fundamentals. Scaling production is historically the riskiest part of a company’s lifecycle, and Rivian has many years ahead before it can successfully hit appropriate targets. For comparison, Tesla took a decade to scale up and deliver its first full year of profit.

Rivian Automotive: Is The Dream Of Challenging Tesla Doomed?
 

Related Articles

Rivian Automotive: Is The Dream Of Challenging Tesla Doomed?

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with other users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:  

  •            Enrich the conversation, don’t trash it.

  •           Stay focused and on track. Only post material that’s relevant to the topic being discussed. 

  •           Be respectful. Even negative opinions can be framed positively and diplomatically. Avoid profanity, slander or personal attacks directed at an author or another user. Racism, sexism and other forms of discrimination will not be tolerated.

  • Use standard writing style. Include punctuation and upper and lower cases. Comments that are written in all caps and contain excessive use of symbols will be removed.
  • NOTE: Spam and/or promotional messages and comments containing links will be removed. Phone numbers, email addresses, links to personal or business websites, Skype/Telegram/WhatsApp etc. addresses (including links to groups) will also be removed; self-promotional material or business-related solicitations or PR (ie, contact me for signals/advice etc.), and/or any other comment that contains personal contact specifcs or advertising will be removed as well. In addition, any of the above-mentioned violations may result in suspension of your account.
  • Doxxing. We do not allow any sharing of private or personal contact or other information about any individual or organization. This will result in immediate suspension of the commentor and his or her account.
  • Don’t monopolize the conversation. We appreciate passion and conviction, but we also strongly believe in giving everyone a chance to air their point of view. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Comments (9)
Tho Nguyen
Tho Nguyen Mar 15, 2022 11:29AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Every EV manufacturers want to be Tesla ******* It will be a ********because no one is even close to compete.
Ron Love
Ron Love Mar 14, 2022 4:15PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Dream? Lmao, who’s dream is that? Rivian needs to first prove they can get to scale production without going bankrupt. 🤣
Peter ONeill
Peter ONeill Mar 14, 2022 4:15PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Amazon is a big investor in and supports its leadership (contract for 100,000 delivery vehicles with already). ZERO chance of it going bankrupt. If anything bigger chance of Amazon taking over and using it as a major part of its global logistics chain/self-driving car projects.
Expressions Productions
Expressions Productions Mar 14, 2022 2:50PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Why will there ever be a competition between Tesla & Rivian? Rivian competitive foe’s are Ford, GM, Dodge thats the market share Rivian want a part of. I never read or heard anything about Rivian challenge Tesla dominance. I think Lucid may be the only possible EV make posing a challange to Tesla in a very limited scope.
Aneesh Joshi
Aneesh Joshi Mar 14, 2022 2:39PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Yes long term investment
Abdul SD
Abdul SD Mar 14, 2022 1:08PM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Long term investment. Keep buying belwo 35 💰
Harrsha Suri
Harrsha Suri Mar 14, 2022 11:20AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
thanks for the perspective
Mohd Izhar Muslim
Mohd Izhar Muslim Mar 14, 2022 10:03AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
That was great, thanks
Dim Pan
Dim Pan Mar 14, 2022 5:42AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
They better change market because Tesla is just stating and years ahead.
Robert Koh
Robert Koh Mar 14, 2022 4:06AM ET
Saved. See Saved Items.
This comment has already been saved in your Saved Items
Rivian is based in Irvine, California, not Irving, Texas.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email