Buy or Sell Rivian Automotive Stock?
Rivian Automotive (RIVN) stock has jumped 23% during the past day, and is currently trading at $15.42. We believe there are only a couple of things to fear in RIVN stock given its overall Moderate operating performance and financial condition. This is aligned with the stock’s Moderate valuation because of which we think it is Fairly Priced.
Below is our assessment:
| CONCLUSION | |
|---|---|
| What you pay: | |
| Valuation | Moderate |
| What you get: | |
| Growth | Very Strong |
| Profitability | Very Weak |
| Financial Stability | Very Strong |
| Downturn Resilience | Very Weak |
| Operating Performance | Moderate |
| Stock Opinion | Fairly Priced |
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Let’s get into details of each of the assessed factors but before that, for quick background: With $19 Bil in market cap, Rivian Automotive offers electric pickup trucks, SUVs, and commercial delivery vans, specializing in vehicle design, development, manufacturing, and sales with notable collaboration on delivery vans.
[1] Valuation Looks Moderate
| RIVN | S&P 500 | |
|---|---|---|
| Price-to-Sales Ratio | 3.2 | 3.1 |
| Price-to-Earnings Ratio | -5.2 | 23.7 |
| Price-to-Free Cash Flow Ratio | -37.8 | 20.3 |
This table highlights how RIVN is valued vs broader market. For more details see: RIVN Valuation Ratios
[2] Growth Is Very Strong
- Rivian Automotive has seen its top line grow at an average rate of 103.0% over the last 3 years
- Its revenues have grown 28% from $4.6 Bil to $5.8 Bil in the last 12 months
- Also, its quarterly revenues grew 78.3% to $1.6 Bil in the most recent quarter from $874 Mil a year ago.
| RIVN | S&P 500 | |
|---|---|---|
| 3-Year Average | 103.0% | 5.3% |
| Latest Twelve Months* | 28.2% | 5.6% |
| Most Recent Quarter (YoY)* | 78.3% | 6.7% |
This table highlights how RIVN is growing vs broader market. For more details see: RIVN Revenue Comparison
[3] Profitability Appears Very Weak
- RIVN last 12 month operating income was $-3.4 Bil representing operating margin of -58.5%
- With cash flow margin of 18.6%, it generated nearly $1.1 Bil in operating cash flow over this period
- For the same period, RIVN generated nearly $-3.6 Bil in net income, suggesting net margin of about -61.3%
| RIVN | S&P 500 | |
|---|---|---|
| Current Operating Margin | -58.5% | 18.8% |
| Current OCF Margin | 18.6% | 20.4% |
| Current Net Income Margin | -61.3% | 12.9% |
This table highlights how RIVN profitability vs broader market. For more details see: RIVN Operating Income Comparison
[4] Financial Stability Looks Very Strong
- RIVN Debt was $6.5 Bil at the end of the most recent quarter, while its current Market Cap is $19 Bil. This implies Debt-to-Equity Ratio of 34.9%
- RIVN Cash (including cash equivalents) makes up $7.1 Bil of $15 Bil in total Assets. This yields a Cash-to-Assets Ratio of 46.6%
| RIVN | S&P 500 | |
|---|---|---|
| Current Debt-to-Equity Ratio | 34.9% | 20.9% |
| Current Cash-to-Assets Ratio | 46.6% | 7.0% |
[5] Downturn Resilience Is Very Weak
RIVN has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
2022 Inflation Shock
- RIVN stock fell 93.0% from a high of $172.01 on 16 November 2021 to $12.00 on 25 April 2023 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
- The highest the stock has reached since then is $27.64 on 31 July 2023 , and currently trades at $15.42
| RIVN | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -93.0% | -25.4% |
| Time to Full Recovery | Not Fully Recovered | 464 days |
But the risk is not limited to major market crashes. Stocks fall even when markets are good – think events like earnings, business updates, outlook changes. Read RIVN Dip Buyer Analyses to see how the stock has recovered from sharp dips in the past.
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