Stock Watch – Rivian Automotive

Rivian Automotive is a manufacturer of electric autonomous vehicles, known as “AEV.”
It is a relatively niche and small company, considering the extremely capital-intensive business of car manufacturing, with a market capitalization of “only” 23 billion dollars. The company’s valuations are performing very well in today’s session, despite the poor market sentiment.

The company has risen by approximately 16% today, thanks to yesterday’s announcement of a groundbreaking product. According to Rivian’s management, their new proprietary processor for autonomous driving, RAP1, is said to offer performance several times better than industry leaders like Tesla. The solution is also claimed to be 50 times more efficient than Rivian’s current standard processors.
Beyond computing power, the supply chain is also important. The company designed the chip itself and will produce it in collaboration with TSMC, cutting ties with Nvidia.

But is this enough to break the company’s rather weak streak? It’s worth remembering that Rivian debuted on the market with a valuation close to 180 dollars per share in 2021. Today, it’s only 19 dollars—a drop of nearly 90%. What is the reason for this?
It is mainly the result of the fact that the company, despite years in the market, is still unprofitable. The market has lost a significant portion of hope and trust in the AEV market and companies in this segment that have not managed to generate profit even in relative isolation. Today, the market is filled with mature designs from Waymo, Tesla, and a range of Chinese brands. So is this a temporary anomaly in a downward trend?

Not necessarily. It could be a breakthrough moment for the company.

Even in its early development phases, the company has repeatedly shown that it is capable of competing in terms of solution quality with entities possessing much larger capital. The company has massive cash reserves—up to 7 billion dollars, losses are decreasing year by year, and new solutions offer a chance for real competition for market share.

Rivian has been recording an unprecedented growth rate in recent quarters, with a 78% increase in revenue year-over-year and a 320% increase in sales in the software sector. Investors interested in changes in this market segment should follow information about R2—it is expected to be a direct competitor to Tesla. Rivian is not politically burdened like Tesla, has high-level proprietary solutions, and a much more resilient supply chain.

RIVN.US (D1)

Source: xStation5

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