Rivian stock analysis. RIVN stock.
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In 2021, electric truck maker Rivian hit a peak market cap of 127 billion dollars. That marked the top of the bubble and today the market cap is just 13.1 billion.
With 11.2 billion of cash and 2.7 billion of debt the enterprise value is only 4.6 billion. Meanwhile the company produced 24,000 vehicles last year and it made 2.2 billion in revenue over the last 12 months. That means the stock is valued at just over 2 times revenue.
Although Rivian has a good chunk of cash on the balance sheet, it needs it because the company is losing a lot of money. Adjusted EBITDA was negative 5 billion last year and free cash flow is negative 6.8 billion over the last 12 months.
There’s no way around that in the automotive business. But Rivian is making progress. It hopes to deliver 50,000 vehicles this year and hit 4 billion in revenue.
It’s guiding for a loss of 4.3 billion EBITDA in 2023 which would be almost 1 billion better than last year.
And the company’s vehicles are well received. The R1T was named motor trend truck of the year in 2021, the R1S has also received good reviews.
On the commercial side, Rivian still has an agreement with Amazon to produce 100,000 delivery vehicles. That agreement is what helped spark the initial enthusiasm for Rivian stock. And Amazon still owns 17% of the company.
That said, it’s difficult to value a company that isn’t expected to make a profit until 2028. Even with 11 billion dollars of cash, Rivian will at some point start to run out and need to tap markets for additional funds.
And Rivian still has a market cap one-fourth the size of Ford which will be a strong competitor in this market.
But if Rivian can meet its targets this year, it sets up a potentially critical 2024.
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