Among the many most-followed names within the electrical automobile house, admittedly Rivian Automotive (NASDAQ:RIVN) is in a significantly better place in comparison with most of its early-stage EV maker friends. This has doubtless performed a job in mitigating worth declines for RIVN inventory.
Though shares have declined in worth by round 51% over the previous twelve months, friends like Lucid Group (NASDAQ:LCID), Mullen Automotive (NASDAQ:MULN), and others are down by far bigger quantities over this similar timeframe.
But whereas Rivian has fewer of the issues plaguing the fledgling upstarts on this fast-growing trade, one colossal drawback retains getting worse. Barring a quick decision to this situation (which is unlikely), shares not solely could have little room to run from present costs (round $14 per share).
The inventory could also be liable to further worth declines, except upcoming information signifies issues are shifting in the fitting path.
Nicely Forward of the Remainder of the Pack
Among the many firms competing for the EV crown at the moment held by Tesla (NASDAQ:TSLA), Rivian is the default front-runner. Not less than, based mostly on the present troublesome state of Rivian’s U.S.-based, publicly traded opponents.
For one, this EV firm is (for now) adequately capitalized. Different EV contenders are burning by way of money too quick and need to increase extra of it. Some have been profitable in shoring up their reserves. Lucid, for example, has been capable of as soon as once more faucet into the deep pockets of its majority shareholder, Saudi Arabia’s Public Funding Fund.
Others, nonetheless, haven’t been as lucky. Lordstown Motors (NASDAQ:RIDE) simply this week filed for chapter, largely on account of an unconsummated financing deal that’s now the topic of litigation. Apart from enough capitalization, Rivian additionally seems to be within the lead in manufacturing.
Though solely time will inform whether or not the corporate meets its 50,000 automobile manufacturing aim this 12 months, even reasonably lacking this goal will nonetheless doubtless put it forward of Lucid and the opposite “also-rans.”
Once more, although, whereas dealing with fewer issues, there’s nonetheless an enormous one which threatens the longer term efficiency of RIVN inventory.
The Competitors is Leaving Rivian within the Mud
Beforehand, I’ve laid out a bear case for Rivian, based mostly on the potential destructive influence of competitors. Particularly, competitors from incumbent U.S. automakers like Ford (NYSE:F). There was a lot to again up this argument.
As an example, the truth that incumbent-built electrical vehicles qualify for the newest EV tax credit score, and are far cheaper than most of Rivian’s electrical truck choices. Extra not too long ago, different components emerge pointing to Rivian being at a aggressive drawback.
An excellent instance is with Basic Motors’ (NYSE:GM) electrical truck contender, the Chevrolet Silverado EV Work Truck. Not solely does this automobile handily beat Rivian’s R1T on worth. The Silverado has far larger vary than the opposite electrical pickups on the market; the R1T included.
It’s not a hidden secret that competitors from Ford and GM is having a destructive influence on Rivian truck demand. With this, RIVN inventory bulls are actually turning to a brand new narrative.
Particularly, that the corporate will make up for sagging R1T demand, for supposed booming demand for the corporate’s R1S SUV mannequin. Nonetheless, it’s unclear whether or not this automobile, plus lower-priced fashions scheduled to debut subsequent 12 months, will save the day.
Backside Line
Whereas Rivian CFO Claire McDonough has been touting that robust demand stays, different components counsel the alternative. Final quarter, Rivian produced extra automobiles than it bought. This month, the corporate resorted to unloading extra stock by way of a manufacturing unit direct sale.
With this, it nonetheless appears clever to take care of a “present me” stance on Rivian. That stated, some upcoming information may show me incorrect. Maybe, even trigger me to regulate my present view on the inventory.
I’m speaking about Rivian’s Q2 supply and monetary outcomes, each of which can drop subsequent month. These could point out that McDonough is on the cash along with her current remarks. Updates to manufacturing/gross sales steerage may additionally paint a greater image of whether or not the competitors situation is formally within the rearview mirror.
Till then, nonetheless, err on the aspect of warning with RIVN inventory.
RIVN inventory earns a D ranking in Portfolio Grader.
On the date of publication, Louis Navellier didn’t have (both instantly or not directly) every other positions within the securities talked about on this article.
The InvestorPlace Analysis Workers member primarily liable for this text didn’t maintain (both instantly or not directly) any positions within the securities talked about on this article.
