Rivian’s Undervalued Stock: A Buying Opportunity Too Good to Pass Up
The electric vehicle (EV) market has been on a wild ride, and Rivian Automotive (NASDAQ: RIVN) is no exception. Since its initial public offering in 2021, the stock has been extremely volatile, creating an incredible buying opportunity for savvy investors.
A Sales Trajectory Worth Noting
Rivian’s success is undeniable, with sales skyrocketing from just $1 million in September 2021 to over $5 billion today. The launch of three new mass market vehicles, the R2, R3, and R3X, priced under $50,000, could propel the company to another stage of significant growth, similar to Tesla’s Model 3 and Model Y.
A Valuation Disconnect
Compared to other EV makers like Tesla and Lucid Group, Rivian trades at a significant discount, with a price-to-sales ratio of 2.2, versus 6.5 and 12.3 for its peers. If Rivian traded in line with these peers, there could be 200% to 600% potential upside.
The Catalyst That Could Close the Gap
One major reason the market remains skeptical is Rivian’s continued losses, with net losses mounting despite impressive sales growth. However, the company is poised to flip to gross profitability very soon, with management promising to achieve this milestone by next quarter. Should this come to pass, the market is likely to react very positively, closing the valuation gap with its peers.
A Vote of Confidence
Achieving positive gross margins would be a huge vote of confidence for Rivian’s management and its ability to survive long enough to ship its mass market vehicles in 2026 and 2027. Customer loyalty surveys suggest that Rivian is making vehicles that customers love, and getting EVs to market priced under $50,000 could be a huge lever of growth.
Aggressive Growth Investors, Take Note
Rivian’s undervalued stock presents an attractive opportunity for aggressive growth investors. With partnerships with deep-pocketed investors mitigating some financial concerns, Rivian is worth a close look before next quarter’s results are released. Just be prepared to double down should expectations fail to match reality.
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