Buying the right stocks at the right time can transform your life. For example, if you had invested $10,000 in an electric vehicle (EV) market leader. Tesla in 2014 you would have a whopping €245,300 today. That is a return of more than 2,430% in just ten years. Could be Rivian automotive industry (NASDAQ: RIVN) be the next best thing? Let’s explore the pros and cons of this EV startup to decide if it has multi-bagger potential in the long run.
Rivian was at the top of the world when its shares became available through a initial public offering (IPO) in 2021. This was a different time for the EV industry. Tesla had recently become profitable, proving that the technology was here to stay. And Rivian’s offering of high-performance trucks and electric cars promised to fill an overlooked opportunity in the market.
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With a starting market capitalization of more than $100 billion, the company immediately became America’s second most valuable automaker, behind Tesla. — leaving behind traditional brands such as Ford Motor Company And General engines in the dust. In retrospect, this made little sense. And the The market on Rivian quickly deteriorated as growth stalled and rivals began offering products such as the F-150 Lights, Silverado EV and Cybertruck, which took over its niche.
Rivian’s third-quarter revenue fell 18% year-over-year to $874 million both production and deliveries. To be honest, the EV industry is now much more competitive than the competition it was when Rivian went public. And macroeconomic challenges such as inflation and high interest rates are unlikely to promote consumer interest in their luxury cars.
But it is difficult to make each Apologies to Rivian if competing products like the Tesla Cybertruck are doing so well. According to Kelley Blue Book, Elon Musk’s polarizing vehicle has sold a whopping 28,240 units until now this year beat Rivian’s R1T, which sold just 10,387 units. This is despite the Cybertruck’s higher sticker price, with a base price of $82,235, compared to Rivian’s R1T, which starts at $71,700.
Worse, Rivian lost an average of $39,130 ​​on every car sold – up from $30,448 last year. Of a gross margin at -45%, it costs the company more to produce and deliver its cars than it can recoup by selling them.
CEO Ryan Scaringe believes he can change the situation. He claims the company is on track to achieve gross profit in the fourth quarter by improving unit sales and variable costs per unit. This includes selling regulatory credits, improving material costs and unlocking production efficiencies. But this does not solve Rivian’s core problem of fierce competition and poor sales growth.
