RIVN - Rivian: The VW Deal Could Be A Game Changer (Upgrade)
2024-07-02 10:04:12 ET
Summary
- Recent developments, including a joint venture with Volkswagen, have prompted me to upgrade Rivian stock to "Buy".
- Financial figures for Rivian show improvement in margins and cost-effectiveness, with expectations for reduced cash burn and increased efficiencies.
- The joint venture with Volkswagen provides a significant financial backing for Rivian, potentially delaying cash burn issues and improving solvency.
- The current cash-to-market cap ratio looks good, and since that ratio will only go up after the JV launch, I think RIVN has a good incentive to grow.
- I'm upgrading the stock from "Hold" to "Buy", as the "game changer" VW gave it seems to be a real one.
Introduction
The first time I wrote about Rivian Automotive, Inc. ( RIVN ) stock here on Seeking Alpha was in November 2021 - that was an IPO analysis where I concluded that the stock had been overvalued to a great extent at the very beginning of its public journey. It immediately surged after the IPO, and it moved away from logically explainable levels of growth – during that rise, I updated my "Sell" recommendation a few times. The stock started to crater, and I held my "Sell" rating until June 2023 when I upgraded RIVN to "Hold", thinking that the company's situation was improving then: Margins were showing clear signs of growth at the time; nevertheless, I couldn't assign a "Buy" rating due to its high valuation and strong competition risk....
Rivian: The VW Deal Could Be A Game Changer (Upgrade)