The Potential of Rivian as a Company
Tesla, Inc. (NASDAQ:TSLA) and Rivian Automotive, Inc. (NASDAQ:RIVN) are two of the most prominent electric vehicle (EV) manufacturers in the market today. While Tesla is the "800-pound gorilla" in EVs, Rivian is certainly an emerging player in the space. As you may know, the world's transition to EVs represents a market opportunity, and the success of Tesla (the company and the stock) has unleashed a flurry of investor interest in this space, with a wild hunt for the "next Tesla."
During the stimulus boom of 2020-21, several EV companies went public at lofty valuations, and Rivian is the poster child of those euphoric times. After IPO'ing at a $66B valuation, Rivian's stock reached a market capitalization of $153.3B at its height in late 2021. However, the feds pivot to quantitative tightening has popped the EV stock bubble with most of these previously high-flying stocks down over 50% from their all time highs.
From a market standpoint, Tesla is a direct competitor to Rivian in the electric vehicle market; however, there are some key differences between the two companies.
While Tesla's stock is down roughly 50% from its all-time highs, Rivian's market cap has compressed by 92% from $150B to $12.5B. With the transition to EVs seemingly inevitable, the sell-off in this space could be a once in a lifetime opportunity. From a market standpoint, Tesla is a direct competitor to Rivian in the electric vehicle market; however, there are some key differences between the two companies. While bears may disagree, Tesla is not just an EV manufacturer. It’s also an incredible technology company.
On the other hand, Rivian is focused on developing adventure-oriented electric vehicles [pickup trucks and SUVs] for consumers. Additionally, Rivian is building electric delivery vans for Amazon, which is also a strategic investor in Rivian at a 20% stake. While there is certainly some overlap between Tesla and Rivian products, the two companies have very different strategic focuses and target customers. Nonetheless, they are both competitors in the broader market for electric vehicles, and Rivian might be at a better position than ever.
By Pratik Patel