Rivian stock analysis. RIVN stock.
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In 2021, electric truck maker Rivian hit a peak market cap of 127 billion dollars. That marked the top of the bubble and today the market cap is just 13.1 billion.
With 11.2 billion of cash and 2.7 billion of debt the enterprise value is only 4.6 billion. Meanwhile the company produced 24,000 vehicles last year and it made 2.2 billion in revenue over the last 12 months. That means the stock is valued at just over 2 times revenue.
Although Rivian has a good chunk of cash on the balance sheet, it needs it because the company is losing a lot of money. Adjusted EBITDA was negative 5 billion last year and free cash flow is negative 6.8 billion over the last 12 months.
There’s no way around that in the automotive business. But Rivian is making progress. It hopes to deliver 50,000 vehicles this year and hit 4 billion in revenue.
It’s guiding for a loss of 4.3 billion EBITDA in 2023 which would be almost 1 billion better than last year.
And the company’s vehicles are well received. The R1T was named motor trend truck of the year in 2021, the R1S has also received good reviews.
On the commercial side, Rivian still has an agreement with Amazon to produce 100,000 delivery vehicles. That agreement is what helped spark the initial enthusiasm for Rivian stock. And Amazon still owns 17% of the company.
That said, it’s difficult to value a company that isn’t expected to make a profit until 2028. Even with 11 billion dollars of cash, Rivian will at some point start to run out and need to tap markets for additional funds.
And Rivian still has a market cap one-fourth the size of Ford which will be a strong competitor in this market.
But if Rivian can meet its targets this year, it sets up a potentially critical 2024.
#rivianstock #stocks #investing #stockstowatch
Join our newsletter: https://www.overlookedalpha.com
In 2021, electric truck maker Rivian hit a peak market cap of 127 billion dollars. That marked the top of the bubble and today the market cap is just 13.1 billion.
With 11.2 billion of cash and 2.7 billion of debt the enterprise value is only 4.6 billion. Meanwhile the company produced 24,000 vehicles last year and it made 2.2 billion in revenue over the last 12 months. That means the stock is valued at just over 2 times revenue.
Although Rivian has a good chunk of cash on the balance sheet, it needs it because the company is losing a lot of money. Adjusted EBITDA was negative 5 billion last year and free cash flow is negative 6.8 billion over the last 12 months.
There’s no way around that in the automotive business. But Rivian is making progress. It hopes to deliver 50,000 vehicles this year and hit 4 billion in revenue.
It’s guiding for a loss of 4.3 billion EBITDA in 2023 which would be almost 1 billion better than last year.
And the company’s vehicles are well received. The R1T was named motor trend truck of the year in 2021, the R1S has also received good reviews.
On the commercial side, Rivian still has an agreement with Amazon to produce 100,000 delivery vehicles. That agreement is what helped spark the initial enthusiasm for Rivian stock. And Amazon still owns 17% of the company.
That said, it’s difficult to value a company that isn’t expected to make a profit until 2028. Even with 11 billion dollars of cash, Rivian will at some point start to run out and need to tap markets for additional funds.
And Rivian still has a market cap one-fourth the size of Ford which will be a strong competitor in this market.
But if Rivian can meet its targets this year, it sets up a potentially critical 2024.
#rivianstock #stocks #investing #stockstowatch
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NewsTranscript
00:00 In 2021, electric truck maker Rivian hit a peak market cap of $127 billion. That marks
00:07 the top of the bubble and today the market cap is just $13.1 billion. With $11.2 billion
00:13 of cash and $2.7 billion of debt, the enterprise value is only $4.6 billion. Meanwhile, the
00:18 company produced 24,000 vehicles last year and it made $2.2 billion in revenue over the
00:24 last 12 months. That means the stock is valued at just over 2 times revenue.
00:29 Although Rivian has a good chunk of cash on the balance sheet, it needs it because the
00:34 company is losing a lot of money. Adjusted EBITDA was -$5 billion last year and free
00:40 cash flow is -$6.8 billion over the last 12 months.
00:45 There's no way around that in the automotive industry but Rivian is making progress. It
00:49 hopes to deliver 50,000 vehicles this year and hit $4 billion in revenue. It's guiding
00:54 for a loss of $4.3 billion in EBITDA in 2023 which would be almost a $1 billion improvement
01:00 on last year. And the company's vehicles are well received. The R1T was named MotorTrend
01:05 Truck of the Year in 2021. The R1S has also received good reviews.
01:11 On the commercial side, Rivian still has an agreement with Amazon to produce 100,000 delivery
01:16 vehicles. That agreement is what helped spark the initial enthusiasm for Rivian stock. And
01:22 Amazon still owns 17% of the company. That said, it's difficult to value a company
01:27 that isn't expected to make a profit until 2028. Even with $11 billion of cash, Rivian
01:33 will at some point start to run out and need to tap markets for additional funds. And Rivian
01:38 still has a market cap, 1/4th the size of Ford which will be a strong competitor in
01:43 this market. But if Rivian can meet its targets this year,
01:46 it does set up a potentially critical 2024. Electric trucks and SUVs are by far the most
01:52 profitable categories in the US. And if Rivian can become a leader in these, it would become
01:57 an enormously valuable company. But there's also a risk that Rivian fails
02:01 completely. The capital needed to succeed in this industry is just so big. But the contract
02:06 with Amazon does provide some ballast and gives Rivian an advantage over other start
02:11 up EV companies. Rivian could go to zero or it could also 10x in value. It's a speculative
02:17 stock but the lower share price creates an intriguing opportunity. I'm going to give
02:21 it a cautious bullish rating but these are my personal opinions not financial advice
02:26 and I've got no position in Rivian stock. For more detailed analysis visit our website
02:30 at overlookedalpha.com