Electrical car (EV) shares had a reasonably combined time all through 2021. Some soared to all-time highs, whereas others suffered crippling declines. One EV inventory to enter the market was Rivian (NASDAQ: RIVN).
Rivian went public on November 10 with its shares priced at $78. Within the seven days after its IPO, the shares skyrocketed to $172. Since then, the share value has calmed down, presently floating across the $92 mark. This nonetheless offers Rivian a whopping $83bn market cap. Does it have the potential to surpass that degree in 2022? Let’s have a look.
As talked about, Rivian is an EV producer. The corporate presently provides two fashions — a pick-up truck and an SUV. These are being constructed on what’s generally known as a ‘skateboard’ platform, a kind of EV base chassis that homes nearly all of the car’s inner elements. That is mass-produced after which used as a basis to construct completely different fashions, serving to save on prices.
That is one issue that provides me encouragement that the excessive demand for Rivian autos could be met in 2022. What’s extra, CEO R.J Scaringe introduced he believed that Rivian would have the capability to supply 1m items by 2030. For context, these are the form of numbers that Tesla presently produces.
At current Rivian has one manufacturing plant situated in Illinois that’s geared up for optimum manufacturing of 150,000 items yearly. If it may possibly attain this form of capability by the tail finish of this yr, it could actually put it on the worldwide EV map.
Nonetheless, as my fellow Idiot Rupert Hargreaves identified, Rivian had knowledgeable the market that it could wrestle to satisfy its preliminary goal of 1,200 autos for This fall 2021. This doesn’t fill me with confidence transferring into 2022.
Will Rivian inventory explode?
The EV market reveals no signal of slowing down over the approaching years. If Rivian can place itself proper, it could possibly be able to take enormous benefit of this.
Nonetheless, extra basically, there are some points I’ve with Rivian and its present share value. Firstly, regardless of its $83bn market cap, the agency is but to make a penny. For context, Ford presently has a market cap of $80bn and delivered $127bn in income for FY20. This huge overvaluing worries me and makes me suppose we might see an enormous drop within the Rivian inventory value throughout 2022.
Along with this, Rivian has competitors that’s far forward of its present capability. Clearly, Tesla is the standout right here. Nonetheless, different smaller EV corporations like NIO and Xpeng have considerably larger capability and are producing revenues. But each are buying and selling below the $50 mark. This once more leads me to query Rivian’s present valuation.
For my part, the inventory appears vastly overvalued contemplating its fundamentals. The corporate’s momentum has already begun to gradual, and I don’t see this altering going into 2022. Subsequently, I don’t see Rivian inventory exploding in 2022. I feel there are far more attractive EV shares in the marketplace and therefore, I received’t be including Rivian to my portfolio at this time.
Dylan Hood owns shares of NIO. The Motley Idiot UK has no place in any of the shares talked about. Views expressed on the businesses talked about on this article are these of the author and subsequently could differ from the official suggestions we make in our subscription companies similar to Share Advisor, Hidden Winners and Professional. Right here at The Motley Idiot we consider that contemplating a various vary of insights makes us higher traders.