Rivian (NASDAQ:RIVN) stock represents an upstart EV manufacturer with a lot of upside but also having a rough 2022. The company is young, so it remains too early to judge much with any certainty. But understanding its products and the goals it will need to achieve will allow contrarians to establish metrics by which they can judge an investment made now.
Rivian Automotive, Inc.
Risk and Reward
Upstart companies are by their very nature high-risk, high-reward ventures. So, investing in Rivian is no different. The company issued its IPO in November. In some sense, it couldn’t have come at a worse time.
That’s because inflation concerns were really starting to heat up around the end of 2021. Rivian, an upstart growth company, wouldn’t face a welcoming market. That IPO was priced at $130 and share prices have only gone down as inflation, seven months later, shows no sign of letting up.
That risk will continue to plague Rivian. But the upside is that RIVN stock has massive potential based on price predictions. Such prognostications are notoriously difficult to trust but contrarians really only need to understand Rivian’s products and measurable goals to see why buying now isn’t a dumb gamble.
Products, Delivery and Demand
Right now Rivian’s consumer success rests upon its R1 platform upon which its R1T truck and R1S sport utility vehicle are based.
The company also has plans for a second vehicle platform, R2, but that is years away and is contingent upon the success of the R1 platform models.
So, right now it’s the R1 vehicles on the consumer side and the Rivian Commercial Vehicle on the commercial side. That was developed alongside Amazon (NASDAQ:AMZN) and is a delivery vehicle. Amazon has placed an order for 100,000 Rivian vehicles but those revenues can’t be counted until much more development occurs.
The R1 counted 90,000 preorders as of May 9. Between the R1 and the delivery truck, it seems demand is more than sufficient.
But it’s all about producing and delivering actual vehicles now. Rivian delivered 920 R1 vehicles in 2021 out of the 1,015 produced.
Through the first quarter of 2022, the company delivered an additional 1,227 R1 vehicles. Success is contingent upon ramping up production. A lot.
Goals to Watch
Rivian intends to ship 25,000 vehicles this year. Note that it had only delivered 2,147 vehicles through Q1 in its entire existence, 1,227 of which were delivered this year. It clearly has to ramp up production quickly.
And that’s what investors should watch now. It is the barometer by which share price will move. If Rivian releases news that shows 25,000 deliveries may happen, it rises.
In the longer term, look for profitability in 2024. Analysts believe that should occur when the firm delivers 100,000 vehicles on an annual basis, again, in 2024.
Takeaway on RIVN Stock
Rivian is a guess right now. Anyone who tells you they know with certainty is bluffing. But at least those quantifiable goals give traders something to base their trades on.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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