Looks like the stock is taking a pounding today.
Any guesses on where it lands?
Are we headed to sub-IPO territory...
Any guesses on where it lands?
Are we headed to sub-IPO territory...
Brutal Start: How Low Will it Go?
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Yikes! Literally a week ago I posted something speculating that maybe it was finally time to buy in for those of us that hadn't gotten in at the IPO. The stock was steady then at ~$113.
I've never been more grateful for my lack of follow-through!
I've never been more grateful for my lack of follow-through!
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I guess I'm greedy thought because I feel like I might buy-in if it goes below $78 🤑
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There were a couple of times I thought the same thing but fortunately I didn't either. I have a feeling it's going to be a bit more up and down like this until Rivian actually starts ramping up production.
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481 Posts
Agreed. I missed the boat the first time, but this could be a great opportunity.
IPOs always fluctuate a bunch in the early stages. I have a strong belief in the long term here.
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A few simple math calculations will give us a rough idea of what Rivian stock price should be.
Assume it’s the year 2026 and both the Illinois and Georgia plants are running at full capacity. This yields a production of 200,000 + 400,000 = 600,000 cars per year. Assume each car produced and sold will yield a profit of $10,000 for Riven for a total annual profit of 600,000 x $10,000 = $6 billion.
Rivian has about 890 million common shares outstanding. (Assumes all options, warrants, conversions, etc. are exercised.) $6 billion divided by 890 million shares = a potential max profit per share in 2026 of about $6.74 per share. If we then give Rivian a generous price earnings ratio of 20 (Remember, it’s a car company – it’s not Apple Computer), then a share price in 2026 should be about $134.83. If we discount this by a 10% per year for expected appreciation from 2021 to 2026, then this future price of $134.82 has to be multiplied by 0.621 to get a current price.
$134.83 x 0.621 yields a current stock price of a little under $84 per share. You can substitute other estimated numbers to see what you come up with, but it would appear that the current stock price is overvalued – and this assumes everything goes OK for the next few years.
As for investing in the electric car field, I prefer the electric utility companies. They pay dividends now, and guess who is going to be generating and selling the electricity for all those charging sessions?
Assume it’s the year 2026 and both the Illinois and Georgia plants are running at full capacity. This yields a production of 200,000 + 400,000 = 600,000 cars per year. Assume each car produced and sold will yield a profit of $10,000 for Riven for a total annual profit of 600,000 x $10,000 = $6 billion.
Rivian has about 890 million common shares outstanding. (Assumes all options, warrants, conversions, etc. are exercised.) $6 billion divided by 890 million shares = a potential max profit per share in 2026 of about $6.74 per share. If we then give Rivian a generous price earnings ratio of 20 (Remember, it’s a car company – it’s not Apple Computer), then a share price in 2026 should be about $134.83. If we discount this by a 10% per year for expected appreciation from 2021 to 2026, then this future price of $134.82 has to be multiplied by 0.621 to get a current price.
$134.83 x 0.621 yields a current stock price of a little under $84 per share. You can substitute other estimated numbers to see what you come up with, but it would appear that the current stock price is overvalued – and this assumes everything goes OK for the next few years.
As for investing in the electric car field, I prefer the electric utility companies. They pay dividends now, and guess who is going to be generating and selling the electricity for all those charging sessions?
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1,139 Posts
Except none of that is reality... We are in a highly speculative environment talking about a company with "unicorn status" and a first mover advantage with much broader aspirations in terms of network effect and expansion for EDV platforms (on top of the retail vehicle segment) and you made a ton of assumptions which a lot of people may not agree with. So, you are essentially just putting a conservative & speculative equation on top of a stock that will not follow conventional norms, which is also trading in an unconventional market environment.
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163 Posts
I did the same.Bought some more RIVN when it hit $94.59 this morning, fingers crossed
I got in with a limit order of 95. I hope back above 100 next week.
They have some subscription models that maybe profitable that you can try to add to your model. FleetOS is subscription, data plan for the car, and some chargers will also charge non-Rivian cars for a fee. Plus, all my shirts and hoodies from the gear store /s
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Wait till Q1 earnings and the lockup ends, should get some decently cheap shared then too.... In this environment shares will fall sub-$80, I'll start buying around IPO prices. Like the man in the bathroom said to the woman waiting outside "just give me time baby, just give me time". 150k capacity factory, upgradable to 200k, and it'll be all of 2023 and not even at 15k/year.... Yet they're spending $5B on another plant... No dilution of effort coming there.
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I fully expect Rivian to survive and proper. They have got about $20 billion "in the bank" and have a lot of good engineers that know how to build better products. (If I were a "few" years younger, I would send in a resume - I have a B. S. degree in computer science from a top ranked school.)
However, the stock price has reflected an "irrational exuberance". Rivian will NOT eliminate Tesla, General Motors, Ford, etc. I expect Rivian's stock price will settle back into normality as opposed to the current euphoria, and if/when it does, I will give serious consideration to buying a significantly sized block of shares.
However, the stock price has reflected an "irrational exuberance". Rivian will NOT eliminate Tesla, General Motors, Ford, etc. I expect Rivian's stock price will settle back into normality as opposed to the current euphoria, and if/when it does, I will give serious consideration to buying a significantly sized block of shares.
I think of investing in Rivian right now as a donation to the planet, not an investment. It's the only car on the market that can compete with Range Rover, and they're polluting pigs. Sorry, but the guy who buys a Rivian is not the same guy who buys a Tesla wing doored minivan. The primise of this SUV has kept me from buying a diesel Suburban, which is the only other fuel efficient bod on frame-ish SUV on the market right now. If I want to make money on an investment I'm not the type to speculate. Especially in a high inflation environment with significant short-term uncertainty.
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Buying their stock on the open market isn't really investing in Rivian directly, they got their money from the IPO, stock goes to $50 or $500.... The money doesn't change. You do more by buying their products to support them (hard to do since they haven't been delivering). Guess if the stock goes up because of the demand of your stock purchases and their increase in stock price helps them with a follow-on it helps but they already have $20B in cash and a follow-on is at least a year away.
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Aha! What to watch for a buy in signal.
On a timing basis, I may very well go along with Eticket99 and Amoney.
Periodically check Upcoming IPO Lockup Expirations
(It should be during May.)
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