Is Rivian a Good Stock to Buy?

Rivian R1T truck

Is Rivian a Good Stock to Buy?

Rivian is one of the most popular electric vehicle (EV) makers in the United States, but that doesn’t mean they’re a great investment. Today, we are going to take a look at Rivian and determine if it is a good stock to buy, plus understand some of the current events impacting the company. By the end, we’ll understand if Rivian is a good investment or if we should pause before considering any investment in the company.

Let’s get started!

Quick Facts

Rivian has had a really bad year — monumentally bad. In fact, Rivian is currently showing an 80% loss in share price and the floor doesn’t seem to be quite in sight yet. For many investors, Rivian is/was a potential opportunity for anyone looking to enter the EV market that isn’t interested in Tesla or just wants diversity within their portfolio.

At its IPO, Rivian hit record highs, only to start losing value soon after. The reasons are varied, but many agree that the finger can be pointed at a few things:

  • Overvaluation and hype as a result of news cycles surrounding Amazon partnerships, plus general market inflation at the time of the company’s IPO
  • Ramping global headwinds like inflation, supply chain issues, and increasing competition in the EV marketplace
  • Consumer fear (less new car shopping) amid a global economic downturn
  • Internal issues at Rivian, notably the mass recall and pullback in varying markets

Looking at these issues, the question of “investability” is a tough one when it comes to Rivian. Essentially, are we seeing the bottom of a curve that will eventually reverse, or is Rivian’s end inevitable? Let’s explore more.

Rivian’s Current Share Price

Rivian’s current share price is floating just under $18 USD, down over 80% from the previous year (and the only year on record for the company so far). When Rivian IPOed about a year ago, it went down as one of the biggest in history, only to immediately start its downward trend toward the bottom.

For many, Rivian was supposed to be one of the prime movers in the EV market in the U.S., and one of the only real alternatives to Tesla. As such, many flocked to invest, especially after news of Amazon partnerships for delivery vans and more were announced.

Simply put, a lot of money has been lost and people are wondering what in the world happened to such a potentially successful launch and product.

Why is Rivian’s Stock Dropping?

Rivian’s stick has been dropping since its debut, and a multitude of reasons could each be partially blamed.

One major factor has been overvaluation and hype surrounding the company. This hype was likely fueled by news cycles surrounding Rivian’s partnerships with Amazon (a contract for 100k delivery vehicles) and other major companies (like Mercedes). The hype and excitement surrounding these partnerships likely contributed to the general market inflation at the time of Rivian’s initial public offering, even though the company didn’t have any real time to get its feet under itself, or a classic example of running before you can walk.

Additionally, ramping global headwinds such as inflation, supply chain issues, and increasing competition in the EV marketplace have had a negative impact on Rivian’s stock price. These factors have made it more challenging for the company to operate and grow, especially as it is in the midst of its crucial period of scaling.

Consumer fear amid a global economic downturn has also likely played a role in the decline of Rivian’s stock price. In times of economic uncertainty, people may be less likely to shop for new cars, which can negatively impact demand for Rivian’s products. This specifically impacts one of the most important metrics regarding EV companies: deliveries. If you aren’t delivering, you aren’t making money.

Finally, there have been some internal issues at Rivian, such as the mass recall of its vehicles and pullbacks in various markets, which may have also contributed to the decline in the company’s stock price. These issues have likely disrupted the company’s operations and affected investor confidence. Within two months of the first real release of their vehicles, Rivian had to recall all of its nearly 14,000 cars on the road, which isn’t a good look.

Outside of a Rivian car factory
Rivian’s stock has been consistently dropping for some time now, but it could very well be a good opportunity to jump in low.

©James Yarbrough/Shutterstock.com

Is this the Bottom for Rivian and Should You Invest?

Looking at all these problems can help us answer the question: is this the bottom for Rivian and will its share price go up in the near future? Let’s quickly analyze the problems we mentioned above.

  1. Hype: For right now, it’s fair to say that the hype around Rivian has sufficiently burned off. Most people aren’t aghast at the share price anymore, especially in recent days. Good for Rivian.
  2. Global issues: We don’t know when this will resolve (nobody does). Inflation seems to be slowing down, but supply chain issues may be a new normal for the next few years. Regarding competition, things are only heating up in the EV market, even if other EVs are suffering a similar fate right now. Bad for Rivian.
  3. Consumer fear is closely tied to global indicators (see above). Still, it does seem that people are still looking to spend money on things, even if it isn’t through the most sustainable means. Ok for Rivian.
  4. Internal issues. Rivian (hopefully) learned its lesson from the recall only a few months ago and seems to be in a defensive posture as they are conserving cash. Ok for Rivian.

While things are rough for the company, now could be a good time to enter at historical stock price lows. Although the bottom may not have arrived yet, trying to perfectly time things may end up being harder than sucking it up for a few months. Rivian is a riskier EV startup that will likely continue to grow in the future, so a little exposure could be valuable.

The Essentials

Let’s go over the essentials. Overall, Rivian is still a major player in the EV game, even if they are still a startup that needs to survive the next year or so in order to begin large scaling operations and become profitable. Investing now, somewhere near a possible bottom, could be a good way to get some EV exposure with one of the EV startups that can make it through some tough economic times.

Here’s what to keep in mind:

  • Rivian is continuing to lose value, along with most other EV stocks right now.
  • Global issues, consumer spending, and internal issues are all impacting Rivian’s ability to sell and deliver cars.
  • The hype around Rivian has probably worn off and it isn’t as inflated as it was back in 2021.
  • Rivian is entering a defensive phase as it saves cash and cuts certain contracts, hoping to weather the storm for the next year or so.

Rivian could be a great investment opportunity since it is at the lowest it’s ever been. Still, they could sink further before they begin to scale and become profitable (both big “ifs”). Start small.

Frequently Asked Questions

What is Rivian and what does the company do?

Rivian designs and manufactures electric vehicles and is one of the most well-known startups in the space.

What are some reasons to consider investing in Rivian?

Rivian is a leader in the electric vehicle market and has strong partnerships and a focus on sustainability and innovation, although this past year has been hard for the company.

Is Rivian a long-term buy?

Rivian is currently hitting historic lows, meaning it could be a potential long-term buy for anyone unconcerned with the immediate share price graphs.

Is Rivian a risky stock?

Currently, Rivian is unprofitable, small, and has a lot of work to do before it gets through its startup phase. It is a risky stock that faces immediate challenges.

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