Rivian Trading Explained: An Intro to RIVN Stock Trading

The electric vehicle (EV) market is growing rapidly, and many emerging companies offer unique value propositions. As such, it can be confusing for traders to pinpoint the front runners in the EV industry.

This article explores Rivian Automotive Inc. (RIVN) and what differentiates it from other EV manufacturers. We'll explore Rivian's unique features and position in the stock market.

Main Points:

• Rivian Automotive Inc. (RIVN) is an American EV manufacturer.
• Established in 2009 by Robert Scaringe, Rivian has achieved significant milestones, including acquiring a manufacturing plant, a notable IPO valuation and significant partnerships.
• As of July 3rd 2024, Rivian's stock recorded significant short-term gains of 31.61% over a month but declined by 35.76% YTD and 26.24% over the past year.
• Online trading allows for short-term speculation on Rivian’s stock price movements by using Contracts for Difference (CFDs) to profit from either rising or falling markets.

What Is Rivian Inc.?

Rivian Automotive, Inc. (RIVN) is a United States-based company that designs and manufactures electric vehicles (EVs) and related automotive technologies. Its headquarters is located in Irvine, California. The company also has a primary manufacturing facility located in Normal, Illinois and other additional facilities in the United States, Serbia, Britain, and Canada.

An Overview of Rivian Automotive, Inc.

This section provides a brief overview of Rivian Inc.'s journey, guiding mission, and key offerings.

History and background of Rivian Automotive Inc.

Rivian's Early Days (2009-2015)

• Founded by Robert Scaringe in Florida, Rivian came into existence in 2009.
• Rivian initially focused on autonomous and electric vehicles under different names (Mainstream Motors and later Avera Automotive) before settling on Rivian Automotive in 2011.
• The company's first concept was a sports car (R1), but it was shelved in favour of a broader impact on the industry.
• In 2015, significant investment allowed Rivian to expand research facilities and shift its focus towards electric autonomous vehicles, potentially for ride-sharing and driverless car markets.

Rivian Gearing Up Production (2016-2020)

• In 2017, Rivian secured a former Mitsubishi Motors (8058. TY) plant in Illinois as its primary production facility, similar to Tesla's (TLSA) acquisition approach.
• That same year, they unveiled their first electric vehicles: the R1T pickup truck and R1S SUV, designed for adventure and potential future autonomy.
• Rivian's workforce grew significantly in 2020 during the production period, reaching over 9,000 employees by late 2021.

Rivian's Journey (2021-2024):

• In late 2021, the company became the first automaker to deliver a consumer electric pickup (R1T). It also had a successful IPO, reaching a valuation of nearly $100 billion.
• In 2022, Rivian faced backlash for raising pre-ordered vehicle prices due to parts shortages.
• The same year, Rivian partnered with Mercedes-Benz (MBG.DE) for a European factory, but this plan fell through later that year. They also announced plans to adopt Tesla's charging standard (NACS) in 2023, potentially allowing Rivian drivers to use Tesla's Supercharger network.
• Despite executive departures in 2023, Rivian achieved significant milestones, such as delivering 10,000 electric delivery vehicles (EDV) to Amazon (AMZN).
• On June 25, 2024, Volkswagen (VOW) announced plans to invest up to $5 billion in Rivian through a joint venture by 2026.

Rivian Inc. Mission and Vision

Rivian's mission emphasises protecting the environment for future generations. The company believes in collaboration and strongly focuses on building high-quality electric vehicles that encourage exploration and sustainability.

The company aims to achieve 100% renewable energy use at the manufacturing plant in Normal, Illinois, by 2030 and to transition other Rivian facilities to 100% renewable energy sources.

Recognising that a significant portion of an electric vehicle's environmental impact comes from the electricity used to charge it, Rivian is also committed to powering its charging networks with 100% renewable energy.

Rivian Key Products and Services

Rivian offers a range of electric vehicles (EVs) and related services for both consumer and commercial use.

1. Consumer Vehicles:
   Rivian manufactures and sells electric vehicles (EVs) for consumers. These include:
• R1T: A two-row, five-passenger electric pickup truck.
• R1S: A three-row, seven-passenger electric SUV.
2. Commercial Vehicles:
   Rivian collaborates with Amazon to develop the Rivian Commercial Van platform for electric delivery vans.
3. Consumer Services:
   In addition to electric vehicles, the company offers the following services:
• Digital tools to help customers finance or lease a Rivian vehicle.
• Telematics-based insurance options.
• Maintenance and repair services to keep Rivian EVs running smoothly.
• Software services, features and updates for Rivian vehicles.
• Charging solutions include the Rivian Adventure Network of fast chargers and the Combined Charging Standard.
4. Commercial Services:
   Rivian offers FleetOS, a subscription platform for managing fleets of Rivian electric vehicles.

The Market for Electric Vehicles and Its Growth Potential

To fully understand Rivian's potential, we must first briefly explore the electric vehicle market in general.

Market Size of the Electric Vehicle Industry

With a market size of $388.1 billion in 2023, the electric sector is poised for explosive growth, reaching an estimated $951.9 billion by 2030. This translates to a compelling Compound Annual Growth Rate (CAGR) of 13.7%.

According to the IEA, electric vehicles recorded a 35% sales increase in 2023, reaching almost 14 million units, as the cumulative electric car fleet on a global scale hit 40 million. China, the USA, and Europe remain top markets, collectively responsible for 95% of global sales in 2023.

Electric Vehicle Comparative Analysis

• Comparative Analysis of Rivian and Tesla

  Both Rivian and Tesla are prominent players in the crowded electric vehicle (EV) market, but they present very different investment prospects. Due to Tesla's optimised supply chain and production model, Tesla stands as the most profitable EV maker (as of March 2024), generating nearly $7,000 in profit per vehicle. Same period in 2024, Tesla boasts over $29 billion in cash reserves, allowing it to invest in new factories, autonomous driving, and robotics.

  In contrast, Rivian has never turned a profit, with expenses continuing to outpace revenue growth. Despite improvements in production and narrowing losses, Rivian lost about $40,000 per vehicle sold in Q4 2023, an improvement from over $160,000 per vehicle in Q4 2022. This financial struggle, coupled with a high burn rate of cash reserves, makes Rivian a riskier investment.

• Comparative Analysis of Rivian and NIO

  NIO Inc. (NIO), a leading Chinese EV maker, has differentiated itself with a network of battery swapping stations, facilitating quick battery changes for its vehicles. While NIO saw strong growth in vehicle deliveries in 2020 and 2021, its growth rate slowed to 34% in 2022, largely due to supply chain issues and macroeconomic challenges. As of December 2023, NIO sequentially improved in deliveries and vehicle margins and maintained a strong cash position.

  In contrast, Rivian, have had issues with over-promising and underdelivering on production targets. While Rivian has increased production from 1,015 vehicles in 2021 to 36,961 in the first nine months of 2023, it has consistently fallen short of its ambitious goals. Safety recalls, and supply chain constraints have further hampered its progress. However, Rivian has made strides in reducing costs and narrowing its losses, supported by a significant cash reserve. Overall, the company has shown healthier growth rates, whereas NIO has a more stable, albeit slower, growth trajectory.

Rivian Financials and Stock Performance Overview

Having briefly explored the electric vehicle market, it is important to have a grasp of Rivian's performance trading indicators.

Rivian Stock Market Performance (as of July 3rd, 2024)

• Short-Term Performance: Rivian’s stock gained 31.61% over the past month.
• Medium-Term Performance: Over the past 3 months, the stock has surged by 42.98%, solidifying its recovery and positive sentiment among investors.
• Long-Term Performance: Despite recent gains, Rivian’s stock accounts for a loss of 35.76% YTD and 26.24% over the past year.
• 52-Week Range: The 52-Week Range shows the highest and lowest prices at which Rivian stock has traded during the past year. For Rivian, the 52-week range is $8.26 to $28.06. This implies that over the year 2023:
  The lowest price Rivian's stock traded at was $8.26. The highest price it reached was $28.06.

Rivian Market Capitalisation and Outstanding Shares (as of July 3rd, 2024)

• Rivian has a market capitalisation of $14.82 billion.
• The company also has 987.5 million shares outstanding and a public float of 717.41 million, meaning that Rivian’s shares are very liquid for public trading.

Rivian Volatility and Risk (as of July 3rd, 2024)

• Beta: The beta value of 2.21 suggests that Rivian’s stock is more volatile than the overall market meaning - Rivian’s stock price is likely to experience larger swings compared to the broader market.

Rivian Earnings Performance

• As of mid-2024, Rivian's earnings per share (EPS) were—$5.76, indicating that the company was operating at a loss.

What are the Strengths of Rivian Stock?

Rivian stock has some unique market positions that might make it worth buying. These include the following:

Large and Growing Market: The global electric vehicle market is projected to experience significant growth, creating a substantial opportunity for Rivian. Their R1T pickup and R1S SUV models are already selling well, indicating strong demand for their product line.

Strong Financial Position: Rivian has historically had a healthy cash balance and access to capital markets. The company has shown progress in reducing losses and improving gross margins per vehicle.

Challenges Facing Rivian

Although a promising EV company, Rivian Inc. is susceptible to factors that can affect its stock price, such as:

Competition: Rivian lacks readily available mass-market products. When the more affordable R2 vehicles arrive in 2026, they may face established automakers like Ford (F) and General Motors (GM) with competitive electric trucks and SUVs.

Market Sensitivity: Rivian's stock is vulnerable to swings in investor sentiment towards its brand, electric vehicles and tech stocks in general. Additionally, rising interest rates could impact the affordability of Rivian's products.

Financial Concerns: If production delays or a broader economic downturn limit Rivian’s access to additional funding, the company's cash reserves might not sustain it through the R2 launch in 2026.

Production and Supply Chain Risks: Rivian’s success relies heavily on efficient production and a reliable supply chain. Unforeseen manufacturing challenges, such as delays and disruptions can pose significant risks to the Rivian's ability to meet customer demand, potentially causing financial setbacks.

Regulatory and Policy Risks: Rivian must balance adapting to changing regulations, environmental policies, and production costs. These factors can significantly impact incentives and Rivian's overall financial performance.

How to Trade Rivian Stock

To potentially capitalise on the stock price fluctuations of Rivian Inc., people can either engage in share dealing or stock trading on Rivian shares.

What Is Rivian Share Dealing?

In the context of Rivian (RIVN), share dealing involves buying and holding Rivian's stock over a medium to long timeframe. The goal is to profit in two ways:

• Stock Price Appreciation: Ideally, if the price of Rivian's stock (RIVN) increases over time. You can sell them later at a premium price to earn a capital gain.
• Potential Dividend Income: Some established companies pay dividends, which are a part of their profits distributed to shareholders. While Rivian is a young company that doesn't currently pay dividends, it might do so as it becomes more profitable.

What Is Rivian Share CFD Trading?

Trading Rivian stock through online platforms like Plus500 lets you speculate on the company's stock price movements without owning the underlying asset. This differs from buying and holding shares for the long term as it is suited for traders who are comfortable with short-term speculation and being able to control the risks inherent to CFD trading.

Instead of directly owning Rivian shares, you'll use Contracts for Difference (CFDs) - financial instruments that track the underlying asset's (Rivian stock) price movement.

With Rivian share CFDs, you can either take:

• Long position: This means, you predict the price of Rivian shares to rise (go long). If the price increases, you make a profit.
• Short position: This means you predict the price of Rivian shares will fall (go short). As such, if the price decreases, you make a profit.

Conclusion

Rivian Inc. (RIVN) embodies more than just an American car manufacturer; it represents a vision for a future powered by sustainable transportation. This makes Rivian stock a viable option for traders and investors seeking exposure to the growing electric vehicle (EV) market.

The company's journey, from its ambitious beginnings to its current position as a contender in the EV landscape, offers a glimpse into its vision for revolutionising the industry. By understanding the factors that influence Rivian's stock price, such as financial performance, industry trends, and government regulations, you can make informed decisions about potential opportunities relevant to both short-term price fluctuations and long-term growth prospects.

Frequently Asked Questions (FAQs):

What Are the Highest and Lowest Prices of Rivian Stock?

As of July 3, 2024, Rivian's highest stock price was $179.47, reached on November 16, 2021. In contrast, the stock hit its all-time low of $8.26 on April 16, 2024.

Does Rivian Automotive distribute dividends to its shareholders?

As of July 2024, Rivian Automotive (RIVN) does not currently distribute dividends to its shareholders.

What Is the Size of Rivian’s Workforce

As of July 3, 2024, Rivian Automotive employs approximately 16,790 people.

Is Rivian Stock Rising?

As of July 3, 2024, rivian stock accounts for a 31.61% gain over the past month and 42.98% over the past 3 months. This highlights the recovery in Rivian stock prices over the past months.