Rivian is Insanely Overvalued

Rivian is probably the best competitor out there in the market to tesla right now. Founded in 2009, this company gained traction when amazon invested about $700 million in 2019. Later ford also invested about $500 million at a valuation somewhere between $5 billion to $7 billion. Recently on Nov 11, they raised $12 billion through an IPO at a valuation of $65 billion, making it the largest IPO of an American company since Facebook. Today it is valued at 85 billion dollars. A few days back it even touched a market cap of 110 billion dollars. They have developed two models, the R1T pickup truck and the other one being R1S SUV.

The valuation of this company is just through the roof. But is it even worth $10 billion? We just got some amazing numbers from the Q3 results, which had a major impact on the shares. They have delivered 386 vehicles so far, an operational loss of $776 million, and a net loss of $1.23 billion. They have also said that they might fall short of a few hundreds from the 1,200-vehicle delivery target for 2021, which is a huge shortfall. With the recent hype around EV vehicles, Rivian is now valued more than Ford, General Motors, and Honda. It boasts of an amazing 71 thousand pre-orders from US and Canada, and an order for 100 thousand delivery vans from Amazon. The deliveries for the order from Amazon are spread out over a period of 10 years. So, in my opinion, that isn’t going to help the company in any way in the near future. Now, the company also announced a new battery and assembly plant east of Atlanta, Georgia which is expected to facilitate the production of up to 400,000 vehicles per year, and the construction of this plant will begin in 2022, and the start of production is slated for 2024. Coming to the pre-orders it is a big uplift of about 15,000 from their last filing, but the question is, will the company be able to deliver those? If someone pre-orders a Rivian now, their delivery date is easily pushed to the end of 2023, and this estimate is considered in the best possible production numbers that the company is showing to the investors. I think someone ordering it now will be getting it only in 2024. Another question is, will people wait that long? Tesla is expected to start its deliveries of Cybertruck next year. Ford is also launching its own EV pickup truck F150 lightning next year with a price starting at $40,000. Tesla Cybertruck’s base variant will be priced at $39,000, both of which are half of what Rivian is demanding from the customers. Rivian’s R1T will start at a price of near $75,000. So, will Rivian be able to fend off the competition? And again, of the 386 deliveries that Rivian did so far, most of them were bought by Rivian Employees. Can an automaker whose vehicle you have never seen on the roads be valued at near $100 billion? Honestly, Rivian is a great company, and probably the only company which has a good chance against Tesla. But the valuation paired with the Q3 numbers invites this kind of mockery. In fact, at this valuation, even Cathie Wood doesn't want to buy it. Seriously, if Cathie Wood is calling it overvalued, people must be DEFINITELY worried. For a company that has just started scaling up, these numbers aren’t that bad, but the valuation makes it look like the worst.