Is this the right time to exit from Rivian Automotive, Inc (RIVN)?

Company Overview

Rivian Automotive, Inc. (RIVN) design, develop, and manufacture category defining EVs and accessories. The company markets its products directly to the customers in the consumer and commercial markets.

Initial Public Offering

The company had launched its IPO on November 10 under the ticker RIVN and had sold approximately 153 million shares at $78/share. We had covered this IPO in our ‘Kalkine IPO Report’ on November 08, 2021 and had concluded that this IPO was “Attractive” given its presence in the EV sector, aggressive growth outlook and large initials order from Amazon.

Price Chart (as on November 16, 2021). Source: REFINITIV, Analysis by Kalkine Group

Conclusion

Investors who have invested into this IPO can consider ‘Exiting’ from their position at the closing price of $172.01 as on November 16, 2021, given:

• Decent gains: The stock has moved up more than ~120% from its IPO price of $78/share.
• Valuation risk: The company is gaining a lot of traction because the market is seeing it as a good fit, pure play competitor to Tesla. However, the company is yet to report any topline number. Also, it is very unlikely to generate positive earnings in the next few years, which could lead to deterioration in the net worth of the company.
• Inflationary pressure: Auto manufacturers are witnessing a steep inflationary pressure on the back of sharp move in the underlying commodity prices. Inflationary pressure could suppress margin and extend losses for Rivian.
  

*The reference data in this report has been partly sourced from Refinitiv.

Disclaimer

Kalkine New Zealand Limited is authorised to provide general advice only. The information on this website does not take into account any of your investment objectives, financial situation or needs. Before you make a decision about whether to acquire a financial product, you should obtain the Product Disclosure Statement from the product issuer. You should consider the appropriateness of advice taking into account your own objectives, financial situation and needs and seek independent financial advice before making any financial decisions.