After Rivian Broke Its Winning Streak, Let It Come Down to Your Buy Price
Forever starts now: that’s the credo of Rivian Automotive (NASDAQ:RIVN). Now that the company has completed its initial public offering (IPO), RIVN stock is available for public trading and you can try out the shares of this ambitious electric vehicle (EV) start-up.
Rivian specializes in big vehicles, especially trucks and SUVs. Large vehicles can be cruelty-free, as the interiors of Rivian’s vehicles are made from 100% animal-free materials.
Not only that, but Rivian’s battery packs are designed to be easily removed from the vehicles and can either be recycled or used in “second- life” applications such as stationary storage.
The uniqueness of Rivian’s vehicles has created some buzz among investors; there may have been too much buzz. Prospective shareholders need to exercise caution, as whatever goes up too fast in the market is liable to come down at the worst possible time.
A Closer Look at RIVN Stock
A surprising thing happened with RIVN stock. After the company priced its shares for the IPO, the stock rose for five consecutive trading days.
How unusual it that? Over the past five years and among a data set consisting of over 200 IPOs, Dow Jones Market Data found just seven other instances of billion-dollar U.S. IPOs undergoing a similar winning streak.
Not that there’s anything wrong with having a post-IPO winning streak. That’s all fine and good. Yet sometimes rallies can just get out of hand.
Gravity finally took over on Nov. 17, when RIVN stock tumbled by as much as 18% in a single trading session.
Even on that day, however, the share price was still elevated as it settled into the $140s. Yesterday the shares tumbled, and today they’re back up 10% to $135 in mid-afternoon trading.
Bear in mind, however, that Rivian’s IPO was priced at just $78 per share, and the stock opened for public trading at $106.75 on Nov. 10.
Therefore, it’s reasonable to conclude that RIVN stock would still be pricey in the $140’s or even in the $130’s. So feel free to wait until it comes down to a more sensible price point before taking a long position in the name.
Big-Buck Backers
Adventurous: that’s the one-word phrase I would use to describe Rivian as a company, as well as its vehicles.
Adventurousness is really what sets Rivian apart. We all know that there are many EV start-ups on Wall Street now, but this one has a different attitude and tone.
Don’t get me wrong; RIVN stock is far from a perfect investment. After all, Rivian is what’s politely called a “pre-revenue company,” and it just launched its first vehicle in September.
That’s why the price action of the stock concerned me so much. Rivian hasn’t really accomplished enough to justify the intense burst of investor enthusiasm.
On the other hand, Rivian has some big-money backers. These include Amazon (NASDAQ:AMZN) with a 22.4% stake, T.Rowe Price (NASDAQ:TROW) with 18.8% and Ford (NYSE:F) with 14.4%.
Explore the Possibilities
Now those firms aren’t run by dummies. Without a doubt, they conducted their due diligence before pouring tens of millions of dollars into Rivian.
Perhaps they appreciate the robust features of Rivian’s vehicles, such as the R1T pickup truck.
That Rivian EV model delivers an EPA-estimated 314 miles of range when paired with 21-inch wheels. And apparently, an R1T with a 400+ mile range will be available in January 2022.
Or maybe Rivian’s large-scale backers are enamored with the R1S SUV, which supposedly allows its drivers to “Drive through 3+ feet of water [and] Rock crawl at a 100% grade.” Moreover, the R1S can take you from zero to 60 miles per hour in three seconds, depending on your tire selection. That’s not too bad, I must admit.
The Bottom Line
Since the likes of Ford and Amazon are backing Rivian, then it’s hard to ignore the potential of this fascinating company. Yet sensible investors don’t have to jump immediately into RIVN stock. Patience will usually reward folks who let stocks come down a pre-selected level.
So feel free to explore the possibilities of RIVN stock for yourself at a more favorable price point.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
