Is Rivian Stock a Solid Long Term Investment?

electric truck

Given the current state of the global economy, there is much uncertainty about the role that Rivian could play in truck manufacturing. The futuristic company was founded in 2009 and sought to create sustainable and environmental solutions for transportation services. Many have hailed the company as the next Tesla, given its propensity for unique and exotic vehicle options. Many insiders speculate that it is only a matter of time before an IPO for the fledgling company, which has already received hundreds of millions in funding from big names like Amazon. There is no doubt that much anticipation surrounds the company, which some have called a “Tesla Killer”. Though it remains to be seen if the macroeconomic conditions will be favorable to an IPO at this point in time. Currently the markets are reeling from a coronavirus scare that threatens to interrupt supply chains and services worldwide.

What You Should Know

It remains to be seen how disruptive the virus will be and to what extent investors will park their money in more stable assets. Rivian is an exciting company whose IPO would receive much press coverage from various news outlets, but it is important to gauge the macroeconomic conditions before any such IPO. This will likely mean that the company holds back on any big announcements until the market has settled back down to normal. At this point, there is no telling how long a possible wait could be. However, there are plenty of other initiatives for the company to focus on in the meantime, such as sales and marketing a possible IPO. The company has already started copying Tesla in some regards and it remains to be seen how they continue to follow this pattern in the future. A unique approach could hold the key to success.

Like Tesla, Rivian has explored the direct sales model in which it forgoes traditional dealerships. This makes sense for the company at this stage, given that it still has problems fulfilling large orders. Amazon CEO Jeff Bezos recently pledged to buy 100,000 Rivian vans for delivery services but the company could take more than a decade to fill the order. Inability to fulfill large orders seems like a common theme among manufacturers of electric vehicles, but hopefully this trend gets less pronounced as the technology becomes more ubiquitous. The demand seems to be there given the state of the American economy, but it is also important to strike while the iron is hot. A proper balance between a cautious and aggressive launch could make all the difference to the success of the company. The next several months will be critical for Rivian to position itself to have a successful public debut. The company might be best served to put all of their eggs in that basket for the time being.

The direct sales model is something that the company already has going for it. By amassing large orders, it is able to retain the capital needed to ramp up production. With several facilities all over the United States, it remains to be seen how it will adjust given the uncertain economic outlook. It is possible that it will focus on the larger orders while forgoing attention from the general public for the time being. The strategy for the company remains to be seen, but it will be fascinating to follow. The company will also likely see a swathe of favorable news coverage in the meantime, given that many outlets like to push the electric agenda. This could prove useful in boosting the company’s status going forward and provide a temporary push in the event of an IPO.

The Facts

Though its private orders are not the only thing that the company has going for it. It has been rumored that they are set to release trucks for private consumption in 2020. These include both the R1T pickup truck and R1S SUV. It will be interesting to see how Rivian meets possible deadlines with their production rollout. Tesla has been famous for botching these same deadlines, so it is only logical to assume that the fledgling automaker could gain an edge by meeting or exceeding expectations. Given that the edges in this industry are quite thin it only makes sense to expect Rivian to exploit every advantage possible. It’s very hard to make a dent in the electric niche, but one way to separate themselves apart is to make and hit ambitious goals.

It is still unclear when the company is going public. Depending on the direction of the economy in the coming months, it could make sense to keep the company private and focus on the large-scale customized orders. Though it is also important to make a splash in the marketplace given that the company eventually wants to market of all its trucks to the everyday consumer. The coming weeks and months should make the situation more clear to both analysts and possible investors. There is already a great amount of hype around the company so it is important to continue to ride the wave of positive news. Carving out an expertise and image will be an important part of the company gaining a foothold in a competitive industry.

When can investors expect a possible IPO? It could be by the end of the year, but this depends on the geological factors of the supply chain. Many supply chains have suffered immensely due to activity in the past few weeks. It remains to be seen how the chains will rebound and if the affect is long-lasting. Regardless of if the company goes public this year or not, it’s definitely worth keeping an eye on in the future. The demand for electric vehicles will only be increasing in the coming decade so it makes sense to have startups like Rivian on the watchlist. It will be interesting to see how the company’s story unfolds.


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