Rivian Stock Fell Below its IPO Price of $78 Per Share: Time to Buy?

Share prices of Rivian Automotive (NASDAQ: RIVN) briefly fell to $75.13 per share on Friday before closing the session at $79.95 per share. It was the first time Rivian stock dipped below its initial public offering (IPO) price of $78 per share. The sell-off marks over a…

55% drawdown from the stock’s all-time intraday high of $179.47 per share set on Nov. 16, 2021.

Here are arguments for and against buying the electric vehicle (EV) stock now.

Take advantage of inefficient markets

Howard Smith: Markets aren’t always efficient, and that’s how investors can gain an advantage. While Rivian shares have dropped recently in concert with many high-growth tech names, one of the biggest dips came with the news that Amazon (NASDAQ: AMZN) was starting a partnership with Chrysler parent Stellantis (NYSE: STLA) to supplement its supply of electric delivery vans. Prior to this news, investors only knew that Amazon — an early investor in Rivian — had placed an initial order for up to 100,000 delivery vans from Rivian. That relationship lent much credibility and promise to an investment in Rivian.

But what some investors might have missed was what an Amazon spokesman told CNBC: “We always knew that our ambitious sustainability goals in our last mile operations would require multiple electric delivery van providers. We continue to be excited about our relationship with Rivian, and this doesn’t change anything about our investment, collaboration, or order size and timing.”

Rivian reported it produced its first 1,000 vehicles at the end of 2021. The current annual production capacity at its Illinois facility is only 150,000, though the company is already making investments to raise that to 200,000. And it has announced plans for a second manufacturing plant in Georgia where it hopes to begin production in 2024.

So in reality, the fact that Amazon is spreading its orders out right now doesn’t really mean anything to Rivian. It couldn’t effectively produce any more for Amazon if it also plans to fulfill its more than 71,000 reservations for the R1T pickup truck it already has.

If one was willing to invest in Rivian for the very long-term at its early valuation, the recent drop in price just provides a better entry point. Any investment in Rivian is speculative, but once an investor has decided to take that chance based on its potential success, this recent pullback to its IPO price provides an opportunity.

Rivian has potential, but it’s too early to buy yet

Daniel Foelber: Rivian stock is cheaper than it’s ever been. But that doesn’t automatically make it the best buy in the space. As Howard said, the market can be irrational in the short term. But in this case…

 

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