There is a great deal of positive buzz about EV startup Rivian and its upcoming electric R1T truck and R1S SUV. Much of it is warranted. Rivan, with the backing of Ford and Amazon, took a smart and gradual approach to build electric vehicles. Reviews of the RIT are extremely positive. Now, Rivian aims to capitalize on this goodwill by going public. The automaker recently filed for a stock IPO. Is the sky the limit for Rivian stock? If you invest in Rivian stock soon, could you earn a huge amount of money with a Tesla-like return on your investment?
Is Rivian stock a good investment?
Should you invest in Rivian stock at its IPO? There are both pros and cons to investing in Rivian stock. First, let’s start with the pros. The Rivian R1T is a great truck. Electric vehicles are increasing in popularity. Pickup trucks are the highest selling vehicle segment in the United States. When you combine all of these things, you have a recipe for enormous financial success.
Rivian was founded in 2009 by Robert “RJ” Scaringe. Instead of rushing eclectic vehicles to the market, Rivan gradually developed them — and the results are astounding. The Rivian R1T, with its four electric motors, boasts phenomenal on-road and off-road driving characteristics. With a 0-60 mph time of just three seconds and excellent handling, the R1T drives like a large sports car. The Rivian R1T also more than holds its own when heading off the beaten path.
Another thing that Rivian has going for it is the backing of Ford and Amazon. Each company holds a 5% stake in Rivian. Also, in its efforts to reduce its carbon footprint, Amazon ordered 100,000 of Rivian’s electric delivery vans.
Tesla paved the way for success for electric cars — and its stock has grown exponentially since its IPO in 2010. A big reason for the success of Tesla is its passionate base of drivers that care about the environment. Rivan may appeal even more to environmentalists. The Rivian R1S and R1T are designed for outdoor enthusiasts. By many appearances, Rivian’s eco-friendly endeavors are sincere and not just a marketing ploy. For example, for every mile that you drive in a Rivian vehicle, Rivian matches that with renewable energy, such as wind and solar.
Rivian stock: Overvalued or undervalued?
Let’s address some of the cons of buying Rivian stock. In its filing for the IPO, Rivian revealed that it had nearly a $1 billion loss for the first six months of 2021, according to Reuters. There’s a reason why most automotive companies ultimately fail. The profit margins for selling cars are very low compared to other industries. The amount of money needed to produce a large quality of cars is very high.
Rivian hasn’t yet set the terms of its IPO. However, it is believed that the EV automaker will seek a valuation of $80 billion. This valuation may be overpriced, especially when you consider the valuation of other automotive companies. GM, which is the high-selling automaker in the U.S., has a valuation of around $75 billion, as of this writing. However, as anyone with a basic understanding of the stock market knows, valuation is typically a measure of potential future earnings. If Rivian follows a similar path of success as Tesla, buying the stock at that valuation could end up being a bargain.
When can I buy Rivian stock?
You’ll likely be able to buy Rivian stock soon, for the IPO for Rivian is slated for late 2021 or early 2022. Rivian stock will be offered via the NASDAQ stock exchange.
Rivian stock could be a risky investment. It could also achieve exponential growth. Something to keep in mind, though, is that Rivian isn’t a typical startup. It has the backing of Amazon and Ford. It already has a passionate base of outdoor enthusiasts and environmentalists. Also, remarkably, it beat larger automakers to be the first company to release an electric pickup truck. All of these factors give credence to buying Rivian stock at its IPO.