Is this stock doomed?

[Yellow5]

In the end, the movement we observe in RIVIAN stock is wildly volatile and frequently inconsistent with news stories and market movements. The other manufacturer of note is struggling, so RIVIAN goes down. A new EV pickup isn't selling well, RIVIAN goes down. If the unreleased truck was amazing and expected to sell well, RIVIAN would go down because it now faces strong competition. Don't read too much in to the price (which is hard to do when you are materially invested).

There are two very distinct camps. Those that think this will be a failed idea and those that think it will succeed. Their valuations are wildly different, and the stock price moves based on who is winning the opinion war. Remember, stock prices are mostly a popularity contest until we get to dividends being paid. Many companies are way overvalued and way undervalued. In the end, if RIVIAN gets to reliable profitability by magnifying sales volume (plus trailer revenues on services), there is a very high likelihood that the current price is far too low. If not, the naysayers win.

I'm a believer, as I'm sure most people here are.

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[Craigins]

That said, if RIVN falls below 13 again The Count will be a buyer.

This is my price point as well. Still trying to average down my IPO and $90 shares.

 

[SDH]

This is pretty silly. My R1T is 100% financed because rates were lower than inflation. Instead I put the full purchase price of the car into the market. Do you think I wish I'd paid cash? Absolutely not.

My fault, I should have been clearer. I mean the folks who don't have the full cash price in their back pocket. You had that, so you made a smart arbitrage.

Specifically, I'm talking about folks who say to themselves, "yeah I can afford $x/month in payment" so I have to take the loan because I don't have the choice. I don't have $90k with which to make a smart financial choice. It's loan or nothing.

It's not much different to all those folks buying houses back in 2006 when in reality, they couldn't afford them.

 

[Craigins]

Specifically, I'm talking about folks who say to themselves, "yeah I can afford $x/month in payment" so I have to take the loan because I don't have the choice. I don't have $90k with which to make a smart financial choice. It's loan or nothing.

I did a bit of the opposite. When the R1T was announced I started saving for the purchase. So while i typically don't have that amount of cash lying around, I did have enough for the purchase price.

 

[Count Orlok]

This is my price point as well. Still trying to average down my IPO and $90 shares.

The Count's mean is $21.10 even with the IPO slaughter.

 

[SDH]

Sanctimonious as heck. Lots of folks have plenty of cash and other liquid-ish assets, but if you can get a loan below your expected rate of return on those (2.5% loan, 5.3% money market?) there's no real reason not to take the loan.

Agree ... my fault for not clarifying ... I'm talking about those folks who do not have plenty of cash and thus the choice to make. I know people who look simply at what the monthly payment would be and say to themselves, for example; "I earn $x/month, the payment on this new car $x/2, therefor I buy it." These aren't folks who have already got pensions and 401k's stacked up and $ saved for a rainy day. These folks generally run on maxed out cards and that ain't sustainable.

 

[trez63]

The solution might be to offer lower rate financing instead of lowering the price. If anything, increase the price of the vehicle, but offer 3% financing and the sheeple will gobble it up like Halloween candy.

 

[s4wrxttcs]

a luxury purchase shouldn't be financed at all.

For me its simply an math problem where I factor in my exit plans.

 

[solaskaze]

They should have started with R2. The path Tesla took to survival only worked because they had no competition in the EV space.

That's quite impossible -- for something as manufacturing intensive as a car, one must start lower volume. Might as well go higher priced (same as Tesla), and Rivian, so far, has a unique project (R1T), and attractive SUV (R1S)

 

[jjswan33]

The solution might be to offer lower rate financing instead of lowering the price. If anything, increase the price of the vehicle, but offer 3% financing and the sheeple will gobble it up like Halloween candy.

Or starting attractive lease options with the tax credit bringing down the capitalized total.

 

[SANZC02]

I understand people keep parroting this logic because that is what Tesla did. What is the advantage of going "high priced"? They are still losing a ton of money on each unit and have a limited runway as they are already able to make more R1s than they can sell. Lucid is further along on this path of peak volume and being desperate to sell vehicles.

Now they run the risk of losing the war or being severely wounded before the R2 is a reality because in a recession the capital markets are brutally unforgiving.

The advantage is higher revenue for lower volume while ramping up. There is also a lot more profit in the more expensive vehicles.

If they started with the R2 and had same ramp up numbers they would have even larger losses because of the reduced revenue.

If doing it the way you suggested made business sense they would have done it but the numbers do not work.

 

[RivianWonderer]

s

My vote is for Giant Meteor in 2024.

Stahpppppp... LOL

 

[s4wrxttcs]

The Count's unpopular opinion is you should never carry a car note longer than a 36 month term... even at zero % (because even at 0% you may be upside-down for a while).

You can't actually be upside-down on a loan if you have more than the loan in savings. You're always going to be net positive.

This notion of being against using credit comes from emotion, and not logic.

There isn't anything necessarily wrong with that because it counteracts two other things that come from emotion.

The first is its hard for humans to consistently act logically. So tying up money into a purchase removes the ability for the person to use that money for some other unnecessary purchase. Like the other day I was thinking about what my Rivian R1T really needs, and I got it into my head that it was a boat. Luckily I tied up my money into the purchase of the Rivian so no boat for me.

Secondly its an antidote to "We'll just leave the list price the same, but offer great financing" sales trick that automakers will use to trick us into continuing to buy cars. If people don't budge on this it forces them to lower their prices.

 

[SANZC02]

Gross margins are negative so there is no profit in the R1. And the addressable market for $100k trucks is not big enough for Rivian to get there with scale.

The higher revenue is coming with higher costs. My point was if Rivian had a crystal ball and knew what the environment would look like they would have started with the R2 and would be better off.

There is profit in the vehicles, the loss comes form company expenses, not in actual build of the R1.

They are calculating the loss on (how much money the company spent over the quarter - revenue from selling the vehicles) / number of units sold.

If they were selling the R2 at probably 2/3 of the price of R1 then the losses would then be 33% higher so instead of 32k per vehicle it would by 43 k per vehicle.

Edit: You might check the loss per vehicle over time as it is dropping significantly qtr by qtr which is why Rivian thinks they will be in a positive cash flow as they end 2024. The 3 things driving that are cost savings on the lines, higher ASP as the price protected vehicles are worked through, and ramp to significantly higher units per week.

 

[1T2022]

I left RIVN at $15~18. Today I came back.

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