Rivian Gets First Rating. It’s a Buy and $130 Price Target.
Ives calls Rivian an “EV stalwart in the making,” adding the company “looking to strategically launch itself into an untapped market as SUV/Pickup Truck EVs are virtually nonexistent in the EV market today.” Trucks and SUVs are very popular in the U.S., typically accounting for more than 60% of total passenger vehicle sales.
“Rivian is a unique vertically integrated EV player poised to have iron clad grip on pickup and SUV market,” Ives tells Barron’s in an emailed statement.” R.J. and team have scaled Rivian quickly and innovative design and skateboard front and center.”
R.J. Scaringe is the MIT educated founder and CEO of Rivian. A skateboard design refers to a automotive chassis that includes many self contained components including electric motors and batteries. Other auto makers have skateboard-type designs as well.
Ives is also encouraged that
(AMZN) is an early investor and early customer, ordering 100,000 delivery trucks from Rivian.
Given it’s the first rating, it’s the first chance for investors to look at estimates. Ives projects $3.6 billion in sales from about 45,000 vehicle deliveries in 2022 and $8.4 billion in sales from about 105,000 deliveries in 2023. The company isn’t expected to generate profit in either year.
Ives target price implies Rivian stock should trade for roughly 15 times estimated 2023 sales. Shares of
(TSLA), the EV leader, trade for about 11 times estimated 2023 sales.
It’s a big, growth stock valuation, but Ives knows his way around growth stocks. He covers EVs and technology stocks such as
(CRM). On the automotive side of his coverage list, Ives rates shares of Tesla and
The Buy ratings on GM, Tesla and now Rivian are predicated on Ives’ belief that EVs will become the dominant form of personal transportation in coming years.
More Rivian ratings will follow this one — most likely arriving on Monday. Wall Street brokers involved in an IPO have to wait 25 days to launch coverage. Including weekends, the prohibition has now lapsed.
Rivian investors will welcome some Buy ratings. The stock is down from a November 16 high of almost $180 a share. Rivian stock fell 6.7% this past week in what was a tough week for growth stocks. The
Russell 1000 Growth Index
dropped 2.2%. The
fell 1.2% for the week and the
Dow Jones Industrial Average
Write to Al Root at email@example.com