While Rivian Automotive, Inc. (NASDAQ: RIVN) is currently seeing good Q2 performance after exceeding its estimated Q2 deliveries and signing an agreement with Tesla (NASDAQ: TSLA) to use its charging network. However, RIVN stock may be currently overvalued compared to other EV stocks following its 17% run after Tesla (NASDAQ: TSLA) started a rally in the EV market on its record Q2 deliveries. Given the tough competition RIVN is witnessing and its poor margins, investors could find RIVN stock a profitable short play.
RIVN Fundamentals
Exceeding Expectations
Although RIVN is currently seeing a decent Q2 in terms of deliveries, it still has a long way to go to prove that this will not be a one-time thing. RIVN produced almost 14,000 vehicles in Q2 putting it on track to achieve its 50,000 production target for the year. Also, RIVN delivered 12,460 vehicles, 10% more than the forecasted 11,300 deliveries, which may see it exceed its forecasted revenue for Q2.
Furthermore, RIVN may see increased deliveries in 2024 thanks to its agreement with Tesla to provide RIVN drivers access to Tesla’s charging network starting in 2024. The new agreement will increase RIVN’s coverage in the US which can increase demand since one of the biggest concerns for new EV customers is network coverage.
Market Overreaction
With Tesla’s record Q2 deliveries, a strong rally in the electric vehicle market started. While RIVN’s positive Q2 deliveries improved the stock’s outlook, Tesla’s record Q2 deliveries were a major reason for the 17% run. The combination of the two events created the perfect storm for RIVN stock, which may have led to the market overreacting resulting in RIVN stock’s recent run.
Compared to Polestar (NASDAQ: PSNY), which expects to produce 80,000 vehicles in 2023, 60% more than RIVN’s production target, Polestar also has a far better gross margin of 3% compared to -80% for RIVN, which means that RIVN is losing money on every vehicle it sells.
Furthermore, Polestar is closer to profitability than RIVN since it reported a net loss of $9 million only in Q1 2023 compared to RIVN’s $1.3 billion net loss. With all of that combined, it is hard not to see RIVN stock as overvalued compared to other EV stocks since RIVN’s current market cap of $18 billion is more than double that of Polestar. For this reason, investors could find better opportunities in other EV manufacturers than RIVN.
Another reason RIVN’s prospects may not be as bright as investors believe is the competition the company is facing from more established manufacturers in the electric truck market – namely General Motors (NYSE: GM) and Ford (NYSE: F). With this in mind, Ford has already released an electric version of the Ford F-150, the best-selling truck in the US. In this way, it might be harder for RIVN to take hold of the market, since customers are more likely to choose more reliable and familiar names if they chose to transition to an electrical truck.
RIVN Financials
In its Q1 2023 report, RIVN’s assets increased 1.5% QoQ from $17.8 billion to $18.1 billion, while its cash and cash equivalents decreased 2.7% QoQ from $11.5 billion to $11.2 billion. RIVN’s total liabilities increased by 35% QoQ from $4 billion to $5.4 billion.
Revenue has increased 695% YoY from $95 million to $661 million. Operating costs decreased more than 16% from $1,077 million to $898 million, which contributed to the operating loss decrease of 15% YoY from $1.58 billion to $1.34 billion. In this way, RIVN reported a net loss of $1.3 billion – a 15% increase YoY.
Technical Analysis
RIVN stock’s trend is neutral with the stock trading in a sideways channel between $15.78 and $13.31. Looking at the indicators, the stock is trading above the 200, 50, and 21 MAs which are bullish indications. Meanwhile, the RSI is extremely overbought at 94.8 and the MACD is bullish. It is worth noting that the stock has broken its $15.78 resistance leaving behind a gap near $16.7 which may be filled in the future.
As for the fundamentals, RIVN stock just witnessed a catalyst in its Q2 deliveries exceeding analysts’ expectations. Despite this, RIVN could be overvalued at current levels given its fundamentals which could see the stock drop and test the $13 support level – filling the gap on the chart in the process – especially with the RSI extremely overbought at the moment.
RIVN Forecast
It is undeniable that RIVN is having a great quarter, with it exceeding its delivery target for Q2 and being on track to achieve its 2023 production target. That said, RIVN stock may be trading at a premium compared to other EV stocks since its market cap is more than double that of Polestar, which is currently outperforming RIVN in many areas. Furthermore, RIVN may find difficulty growing its market share since it faces tough competition from companies like Ford and General Motors. All of that makes RIVN stock overvalued and may be due to a correction soon – making it a potentially profitable short play.
RIVN Fundamentals
Exceeding Expectations
Although RIVN is currently seeing a decent Q2 in terms of deliveries, it still has a long way to go to prove that this will not be a one-time thing. RIVN produced almost 14,000 vehicles in Q2 putting it on track to achieve its 50,000 production target for the year. Also, RIVN delivered 12,460 vehicles, 10% more than the forecasted 11,300 deliveries, which may see it exceed its forecasted revenue for Q2.
Furthermore, RIVN may see increased deliveries in 2024 thanks to its agreement with Tesla to provide RIVN drivers access to Tesla’s charging network starting in 2024. The new agreement will increase RIVN’s coverage in the US which can increase demand since one of the biggest concerns for new EV customers is network coverage.
Market Overreaction
With Tesla’s record Q2 deliveries, a strong rally in the electric vehicle market started. While RIVN’s positive Q2 deliveries improved the stock’s outlook, Tesla’s record Q2 deliveries were a major reason for the 17% run. The combination of the two events created the perfect storm for RIVN stock, which may have led to the market overreacting resulting in RIVN stock’s recent run.
Compared to Polestar (NASDAQ: PSNY), which expects to produce 80,000 vehicles in 2023, 60% more than RIVN’s production target, Polestar also has a far better gross margin of 3% compared to -80% for RIVN, which means that RIVN is losing money on every vehicle it sells.
Furthermore, Polestar is closer to profitability than RIVN since it reported a net loss of $9 million only in Q1 2023 compared to RIVN’s $1.3 billion net loss. With all of that combined, it is hard not to see RIVN stock as overvalued compared to other EV stocks since RIVN’s current market cap of $18 billion is more than double that of Polestar. For this reason, investors could find better opportunities in other EV manufacturers than RIVN.
Another reason RIVN’s prospects may not be as bright as investors believe is the competition the company is facing from more established manufacturers in the electric truck market – namely General Motors (NYSE: GM) and Ford (NYSE: F). With this in mind, Ford has already released an electric version of the Ford F-150, the best-selling truck in the US. In this way, it might be harder for RIVN to take hold of the market, since customers are more likely to choose more reliable and familiar names if they chose to transition to an electrical truck.
RIVN Financials
In its Q1 2023 report, RIVN’s assets increased 1.5% QoQ from $17.8 billion to $18.1 billion, while its cash and cash equivalents decreased 2.7% QoQ from $11.5 billion to $11.2 billion. RIVN’s total liabilities increased by 35% QoQ from $4 billion to $5.4 billion.
Revenue has increased 695% YoY from $95 million to $661 million. Operating costs decreased more than 16% from $1,077 million to $898 million, which contributed to the operating loss decrease of 15% YoY from $1.58 billion to $1.34 billion. In this way, RIVN reported a net loss of $1.3 billion – a 15% increase YoY.
Technical Analysis
RIVN stock’s trend is neutral with the stock trading in a sideways channel between $15.78 and $13.31. Looking at the indicators, the stock is trading above the 200, 50, and 21 MAs which are bullish indications. Meanwhile, the RSI is extremely overbought at 94.8 and the MACD is bullish. It is worth noting that the stock has broken its $15.78 resistance leaving behind a gap near $16.7 which may be filled in the future.
As for the fundamentals, RIVN stock just witnessed a catalyst in its Q2 deliveries exceeding analysts’ expectations. Despite this, RIVN could be overvalued at current levels given its fundamentals which could see the stock drop and test the $13 support level – filling the gap on the chart in the process – especially with the RSI extremely overbought at the moment.
RIVN Forecast
It is undeniable that RIVN is having a great quarter, with it exceeding its delivery target for Q2 and being on track to achieve its 2023 production target. That said, RIVN stock may be trading at a premium compared to other EV stocks since its market cap is more than double that of Polestar, which is currently outperforming RIVN in many areas. Furthermore, RIVN may find difficulty growing its market share since it faces tough competition from companies like Ford and General Motors. All of that makes RIVN stock overvalued and may be due to a correction soon – making it a potentially profitable short play.