Should You Buy Rivian Stock Instead of Tesla?

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Should You Buy Rivian Stock Instead of Tesla?

MotleyFool2023-11-23

KEY POINTSRivian's stock price has fallen sharply since the electric vehicle maker went public.Revenue is soaring and losses are narrowing; however, profitability still looks far off.With its shares ...

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aaffsmcjje
·2023-11-23
Id say yes
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All figures quoted in US dollars unless otherwise stated. With its shares down by almost 90% since it went public in November 2022, Rivian  has been a hugely disappointing investment for those who bought shares early, especially compared to alternatives like Tesla, which is up by around 27% over that one-year timeframe. The upstart electric vehicle  maker has had to raise capital as its cash burn has continued.  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The upstart electric vehicle (EV) maker has had to raise capital as its cash burn has continued.But now that those issues have been priced into the previously overvalued stock, could it be time to buy?What went wrong for Rivian?Rivian's story over the past year illustrates some of the dangers of investing in initial public offerings (IPOs) -- a dynamic where retail investors can often end up holding the bag for a start-up's powerful early-stage backers. In Rivian's case, these included giants like Amazon and Ford Motor Company, both of which had business partnerships with Rivian prior to its IPO. These deals were votes of confidence in the automaker, and likely contributed to its lofty initial valuation of $85.9 billion -- more than Ford and General Motors combined.The problem is that Rivian's fundamentals didn't support such a high price tag. In 2022, the company generated just $1.66 billion in revenue and a whopping $6.86 billion in operational losses.To be fair, it is normal for early-stage companies to post small amounts of revenue and big losses as they pour resources into scaling up their businesses. But Rivian's valuation was far out of touch with reality. Its current market capitalization of around $16 billion makes more sense considering the uncertainty around its future in its competitive industry, as well as macroeconomic challenges like higher interest rates and inflation.Rivian stock now trades at a price-to-sales multiple of 4.1, which is a sharp discount to its rival Tesla, which trades for 8.5 times sales. Its valuation makes more sense now, and positions the company as a relatively affordable way to bet on the EV opportunity. That said, valuation isn't the only factor a potential investor needs to consider.What about its operational performance?Rivian's operational performance has been mixed. In the third quarter, revenue jumped by an impressive 149% year over year to $1.33 billion. And despite the challenging macroeconomic environment, the company has thus far avoided getting caught up in the EV industry's price war. Indeed, it has actually increased its average sales price per vehicle thanks to strong demand for its models, according to CEO RJ Scaringe. This trend suggests customers see standout value in its unique, outdoorsy EV brand.Management is also optimistic about the future. The company has raised its full-year production guidance to 54,000 vehicles for 2023 (up from 52,000 previously).That said, Rivian's bottom line still leaves much to be desired. The company generated an operating loss of $1.44 billion in Q3. While this was an improvement from the $1.77 billion it lost in the prior-year period, Rivian is still draining its cash reserves, which stood at just $7.9 billion as of the end of the quarter. Investors should expect this company to eventually issue more debt or sell more shares (with the resulting equity dilution) -- or both -- to fund operations as it runs low on liquidity.Management has said it expects Rivian's gross margin will turn positive in 2024. But this simply means that the selling prices of its vehicles will at that point be higher than their direct production costs -- gross margin doesn't factor in substantial overhead expenses like office salaries, marketing, or research and development.Is Rivian a better buy than Tesla?For investors, Rivian has two things that make it attractive compared to Tesla. Firstly, it is a smaller company with possibly more expansion potential. And secondly, it has a lower valuation. However, investors should be careful about betting on less mature companies because their challenges can quickly spiral out of control, particularly if macroeconomic conditions worsen.Ultimately, Rivian looks like an appealing long-term buy. But investors may want to wait for a few more quarters of upbeat data before purchasing the stock.","kind":null,"is_publish_news":true,"is_publish_highlight":true,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":244526526730392,"gmtCreate":1700722770079,"gmtModify":1700722774215,"author":{"id":"3557887424829909","authorId":"3557887424829909","name":"aaffsmcjje","avatar":"https://static.tigerbbs.com/0fcb01cf792998a6ce47337ae22c20b9","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3557887424829909","authorIdStr":"3557887424829909"},"htmlText":"Id say yes","listText":"Id say yes","text":"Id say yes","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/244526526730392","repostId":2385003745,"repostType":2,"repost":{"id":"2385003745","pubTimestamp":1700720100,"share":"https://ttm.financial/m/news/2385003745?lang=&edition=fundamental","pubTime":"2023-11-23 14:15","market":"us","language":"en","title":"Should You Buy Rivian Stock Instead of Tesla?","url":"https://stock-news.laohu8.com/highlight/detail?id=2385003745","media":"MotleyFool","summary":"This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated. With its shares down by almost 90% since it went public in November 2022, Rivian  has been a hugely disappointing investment for those who bought shares early, especially compared to alternatives like Tesla, which is up by around 27% over that one-year timeframe. The upstart electric vehicle  maker has had to raise capital as its cash burn has continued.  But now that those issues have been priced into the previously overvalued stock, could it be time to buy?","content":"<html><head></head><body><h2 id=\"id_1049947870\" style=\"text-align: start;\">KEY POINTS</h2><ul style=\"\"><li><p>Rivian&#39;s stock price has fallen sharply since the electric vehicle maker went public.</p></li><li><p>Revenue is soaring and losses are narrowing; however, profitability still looks far off.</p></li></ul><p>With its shares down by almost 90% since it went public in November 2022, <strong>Rivian</strong> has been a hugely disappointing investment for those who bought shares early, especially compared to alternatives like <strong>Tesla, </strong>which is up by around 27% over that one-year timeframe. The upstart electric vehicle (EV) maker has had to raise capital as its cash burn has continued.</p><p>But now that those issues have been priced into the previously overvalued stock, could it be time to buy?</p><h2 id=\"id_447019289\">What went wrong for Rivian?</h2><p>Rivian&#39;s story over the past year illustrates some of the dangers of investing in initial public offerings (IPOs) -- a dynamic where retail investors can often end up holding the bag for a start-up&#39;s powerful early-stage backers. In Rivian&#39;s case, these included giants like <strong>Amazon</strong> and <strong>Ford Motor Company</strong>, both of which had business partnerships with Rivian prior to its IPO. These deals were votes of confidence in the automaker, and likely contributed to its lofty initial valuation of $85.9 billion -- more than Ford and <strong>General Motors</strong> combined.</p><p>The problem is that Rivian&#39;s fundamentals didn&#39;t support such a high price tag. In 2022, the company generated just $1.66 billion in revenue and a whopping $6.86 billion in operational losses.</p><p>To be fair, it is normal for early-stage companies to post small amounts of revenue and big losses as they pour resources into scaling up their businesses. But Rivian&#39;s valuation was far out of touch with reality. Its current market capitalization of around $16 billion makes more sense considering the uncertainty around its future in its competitive industry, as well as macroeconomic challenges like higher interest rates and inflation.</p><p>Rivian stock now trades at a price-to-sales multiple of 4.1, which is a sharp discount to its rival Tesla, which trades for 8.5 times sales. Its valuation makes more sense now, and positions the company as a relatively affordable way to bet on the EV opportunity. That said, valuation isn&#39;t the only factor a potential investor needs to consider.</p><h2 id=\"id_3396551906\">What about its operational performance?</h2><p>Rivian&#39;s operational performance has been mixed. In the third quarter, revenue jumped by an impressive 149% year over year to $1.33 billion. And despite the challenging macroeconomic environment, the company has thus far avoided getting caught up in the EV industry&#39;s price war. Indeed, it has actually increased its average sales price per vehicle thanks to strong demand for its models, according to CEO RJ Scaringe. This trend suggests customers see standout value in its unique, outdoorsy EV brand.</p><p>Management is also optimistic about the future. The company has raised its full-year production guidance to 54,000 vehicles for 2023 (up from 52,000 previously).</p><p>That said, Rivian&#39;s bottom line still leaves much to be desired. The company generated an operating loss of $1.44 billion in Q3. While this was an improvement from the $1.77 billion it lost in the prior-year period, Rivian is still draining its cash reserves, which stood at just $7.9 billion as of the end of the quarter. Investors should expect this company to eventually issue more debt or sell more shares (with the resulting equity dilution) -- or both -- to fund operations as it runs low on liquidity.</p><p>Management has said it expects Rivian&#39;s gross margin will turn positive in 2024. But this simply means that the selling prices of its vehicles will at that point be higher than their direct production costs -- gross margin doesn&#39;t factor in substantial overhead expenses like office salaries, marketing, or research and development.</p><h2 id=\"id_4240554583\">Is Rivian a better buy than Tesla?</h2><p>For investors, Rivian has two things that make it attractive compared to Tesla. Firstly, it is a smaller company with possibly more expansion potential. And secondly, it has a lower valuation. However, investors should be careful about betting on less mature companies because their challenges can quickly spiral out of control, particularly if macroeconomic conditions worsen.</p><p>Ultimately, Rivian looks like an appealing long-term buy. But investors may want to wait for a few more quarters of upbeat data before purchasing the stock. </p></body></html>","source":"motleyfoolau_stock","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Should You Buy Rivian Stock Instead of Tesla?</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; 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}\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nShould You Buy Rivian Stock Instead of Tesla?\n</h2>\n\n<h4 class=\"meta\">\n\n\n2023-11-23 14:15 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com.au/2023/11/22/should-you-buy-rivian-stock-instead-of-tesla-usfeed/><strong>MotleyFool</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>KEY POINTSRivian's stock price has fallen sharply since the electric vehicle maker went public.Revenue is soaring and losses are narrowing; however, profitability still looks far off.With its shares ...</p>\n\n<a href=\"https://www.fool.com.au/2023/11/22/should-you-buy-rivian-stock-instead-of-tesla-usfeed/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"BK4551":"寇图资本持仓","LU1861220033.SGD":"Blackrock Next Generation Technology A2 SGD-H","LU0820561818.USD":"安联收益及增长平衡基金Cl AM DIS","LU0689472784.USD":"安联收益及增长基金Cl AM AT Acc","LU0198837287.USD":"UBS (LUX) EQUITY SICAV - USA GROWTH \"P\" (USD) ACC","LU2602419157.SGD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"AC\" (SGD) ACC","LU1551013425.SGD":"Allianz Income and Growth Cl AMg2 DIS H2-SGD","BK4581":"高盛持仓","LU0348723411.USD":"ALLIANZ GLOBAL HI-TECH GROWTH \"A\" (USD) INC","BK4099":"汽车制造商","BK4511":"特斯拉概念","LU1720051108.HKD":"ALLIANZ GLOBAL ARTIFICIAL INTELLIGENCE \"AT\" (HKD) ACC","LU1861215975.USD":"贝莱德新一代科技基金 A2","BK4548":"巴美列捷福持仓","LU0234570918.USD":"高盛全球核心股票组合Acc Close","LU2357305700.SGD":"Allianz Global Artificial Intelligence ET H2-SGD","LU2063271972.USD":"富兰克林创新领域基金","LU1429558221.USD":"Natixis Loomis Sayles US Growth Equity RA USD","LU1839511570.USD":"WELLS FARGO GLOBAL FACTOR ENHANCED EQUITY \"I\" (USD) ACC","LU0823411888.USD":"法巴消费创新基金 Cap","LU0053666078.USD":"摩根大通基金-美国股票A（离岸）美元","LU1435385759.SGD":"Natixis Loomis Sayles US Growth Equity RA SGD-H","LU1551013342.USD":"Allianz Income and Growth Cl AMg2 DIS USD","LU0082616367.USD":"摩根大通美国科技A（dist）","LU0056508442.USD":"贝莱德世界科技基金A2","LU0719512351.SGD":"JPMorgan Funds - US Technology A (acc) SGD","RIVN":"Rivian Automotive, Inc.","IE00B1XK9C88.USD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A\" (USD) ACC","BK4585":"ETF&股票定投概念","LU1914381329.SGD":"Allianz Best Styles Global Equity Cl ET Acc H2-SGD","LU2249611893.SGD":"BNP PARIBAS ENERGY TRANSITION \"CRH\" (SGD) ACC","LU0234572021.USD":"高盛美国核心股票组合Acc","BK4534":"瑞士信贷持仓","LU0820562030.AUD":"ALLIANZ INCOME AND GROWTH \"AMH2\" (AUDHDG) H2 INC","BK4555":"新能源车","IE00BSNM7G36.USD":"NEUBERGER BERMAN SYSTEMATIC GLOBAL SUSTAINABLE VALUE \"A\" (USD) ACC","BK4533":"AQR资本管理(全球第二大对冲基金)","LU0823414478.USD":"法巴经典能源转换基金","IE00BWXC8680.SGD":"PINEBRIDGE US LARGE CAP RESEARCH ENHANCED \"A5\" (SGD) ACC","LU0097036916.USD":"贝莱德美国增长A2 USD","BK4527":"明星科技股","LU0820561909.HKD":"ALLIANZ INCOME AND GROWTH \"AM\" (HKD) INC","LU0466842654.USD":"HSBC ISLAMIC GLOBAL EQUITY INDEX \"A\" (USD) ACC","LU2087621335.USD":"ALLSPRING GLOBAL FACTOR ENHANCED EQUITY \"A\" (USD) ACC","LU2326559502.SGD":"Natixis Loomis Sayles US Growth Equity P/A SGD-H","BK4550":"红杉资本持仓","LU1548497426.USD":"安联环球人工智能AT Acc","LU0316494557.USD":"FRANKLIN GLOBAL FUNDAMENTAL STRATEGIES \"A\" ACC"},"source_url":"https://www.fool.com.au/2023/11/22/should-you-buy-rivian-stock-instead-of-tesla-usfeed/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"2385003745","content_text":"KEY POINTSRivian's stock price has fallen sharply since the electric vehicle maker went public.Revenue is soaring and losses are narrowing; however, profitability still looks far off.With its shares down by almost 90% since it went public in November 2022, Rivian has been a hugely disappointing investment for those who bought shares early, especially compared to alternatives like Tesla, which is up by around 27% over that one-year timeframe. The upstart electric vehicle (EV) maker has had to raise capital as its cash burn has continued.But now that those issues have been priced into the previously overvalued stock, could it be time to buy?What went wrong for Rivian?Rivian's story over the past year illustrates some of the dangers of investing in initial public offerings (IPOs) -- a dynamic where retail investors can often end up holding the bag for a start-up's powerful early-stage backers. In Rivian's case, these included giants like Amazon and Ford Motor Company, both of which had business partnerships with Rivian prior to its IPO. These deals were votes of confidence in the automaker, and likely contributed to its lofty initial valuation of $85.9 billion -- more than Ford and General Motors combined.The problem is that Rivian's fundamentals didn't support such a high price tag. In 2022, the company generated just $1.66 billion in revenue and a whopping $6.86 billion in operational losses.To be fair, it is normal for early-stage companies to post small amounts of revenue and big losses as they pour resources into scaling up their businesses. But Rivian's valuation was far out of touch with reality. Its current market capitalization of around $16 billion makes more sense considering the uncertainty around its future in its competitive industry, as well as macroeconomic challenges like higher interest rates and inflation.Rivian stock now trades at a price-to-sales multiple of 4.1, which is a sharp discount to its rival Tesla, which trades for 8.5 times sales. Its valuation makes more sense now, and positions the company as a relatively affordable way to bet on the EV opportunity. That said, valuation isn't the only factor a potential investor needs to consider.What about its operational performance?Rivian's operational performance has been mixed. In the third quarter, revenue jumped by an impressive 149% year over year to $1.33 billion. And despite the challenging macroeconomic environment, the company has thus far avoided getting caught up in the EV industry's price war. Indeed, it has actually increased its average sales price per vehicle thanks to strong demand for its models, according to CEO RJ Scaringe. This trend suggests customers see standout value in its unique, outdoorsy EV brand.Management is also optimistic about the future. The company has raised its full-year production guidance to 54,000 vehicles for 2023 (up from 52,000 previously).That said, Rivian's bottom line still leaves much to be desired. The company generated an operating loss of $1.44 billion in Q3. While this was an improvement from the $1.77 billion it lost in the prior-year period, Rivian is still draining its cash reserves, which stood at just $7.9 billion as of the end of the quarter. Investors should expect this company to eventually issue more debt or sell more shares (with the resulting equity dilution) -- or both -- to fund operations as it runs low on liquidity.Management has said it expects Rivian's gross margin will turn positive in 2024. But this simply means that the selling prices of its vehicles will at that point be higher than their direct production costs -- gross margin doesn't factor in substantial overhead expenses like office salaries, marketing, or research and development.Is Rivian a better buy than Tesla?For investors, Rivian has two things that make it attractive compared to Tesla. Firstly, it is a smaller company with possibly more expansion potential. And secondly, it has a lower valuation. However, investors should be careful about betting on less mature companies because their challenges can quickly spiral out of control, particularly if macroeconomic conditions worsen.Ultimately, Rivian looks like an appealing long-term buy. But investors may want to wait for a few more quarters of upbeat data before purchasing the stock.","news_type":1},"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"hasMoreComments":true,"newsSizeData":{"likeSize":4,"commentSize":1,"repostSize":2,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false}}