Rivian stock soared today — is it a buy?

Rivian has the potential to be a solid EV play, but it could be a long road before it pays off.

| More on:
Rivian's Illinois factory.

Image source: Rivian

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The share price of electric vehicle (EV) maker Rivian Automotive (NASDAQ: RIVN) rose by more than 17% Tuesday. Even in the world of EV stocks, which tend to rise and fall rather dramatically, that's a significant price spike. 

There was no specific news driving Rivian's share price higher, though. Rather, it appears that investors may be trying to take advantage of the fact that the stock has fallen by more than 47% over the past three months.

Are investors right to be snatching up shares of the electric truck maker now? I think so, but I also think they should temper their expectations. 

There's no denying that Rivian has created a fantastic product. Its R1T model is the first-ever all-electric pickup truck, and it won MotorTrend's Truck of the Year award for 2022. 

That doesn't mean it will be a slam dunk when it comes to sales, but it does indicate that Rivan could have a first-mover advantage in the EV pickup truck space. 

At a base price of about $79,000, the R1T isn't cheap, and some other electric trucks will be hitting the market soon, most notably the Ford F-150 Lightning. But as Tesla's success has demonstrated, there's a market for EVs that are designed, built, and sold by companies devoted entirely to that specific niche. 

Will traditional automakers succeed in the EV industry? Of course. But it seems a bit premature to count out disruptive players like Rivian that already have great products. 

One of the biggest arguments against Rivian right now is the fact that it's facing supply chain problems and rising costs. 

While those are significant hurdles, and the company forecasts that it'll only produce 25,000 vehicles this year, it also has enough cash to keep the company growing.

Rivian ended 2021 with $18.4 billion in cash, which should give the EV maker the financial cushion it needs to stay afloat as it expands production. 

That being said, there are no guarantees for Rivian or its investors. The automotive industry is experiencing a significant shift right now, and many traditional automakers will successfully move from gas-powered to battery-powered vehicles. 

Some of the current crop of hopeful EV makers will carve out their own niches over the next few years, and some may fade away. 

But with its current cash stockpile and its award-winning truck, Rivian has the potential to be a success over the long term, which is why I think opening a small position in this EV stock could be a smart move. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns and has recommended Tesla. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 

More on International Stock News

A young entrepreneur boy catching money at his desk, indicating growth in the ASX share price or dividends
International Stock News

Why this high-flying investor is selling Tesla shares and buying this US tech stock instead

Ark Invest funds have been selling the electric vehicle maker's stock over the last few weeks and reinvesting the proceeds…

Read more »

two computer geeks sit across from each other with their laptop computers touching as they look confused and confounded by what they are seeing on their screens.
International Stock News

Is Nvidia stock heading to $175?

The bulls are lining up ahead of Nvidia's earnings report next week.

Read more »

A woman holds a bitcoin token in her hand as she smiles at the camera in the background.
International Stock News

Bitcoin keeps soaring. Could it hit $95,000 this week?

Could the current crypto rally have enough juice to push the coin above that once-inconceivable level?

Read more »

A boy in a green shirt holds up his hands in front of a screen full of question marks.
International Stock News

2 reasons to buy Nvidia shares before November 20 (and 1 reason to wait)

This top AI stock has soared nearly 200% this year!

Read more »

A group of friends push their van up the road on an Australian road.
International Stock News

Why Tesla stock just pulled back

Tesla finally hit a speed bump after a blistering post-election rally.

Read more »

Two happy excited friends in euphoria mood after winning in a bet with a smartphone in hand.
International Stock News

Why Tesla stock keeps going up

Tesla stock costs more than $1 trillion now. Is that too expensive?

Read more »

A businessman in soft-focus holds two fingers in the air in the foreground of the shot as he stands smiling in the background against a clear sky.
International Stock News

2 Numbers I'll be looking for on November 20 when Nvidia reports earnings

While many analysts and investors will be looking at revenue and profit growth, two other figures are more important to…

Read more »

A man wearing a blue jumper and a hat looks at his laptop with a distressed and fearful look on his face.
International Stock News

Magnificent Seven: Unstoppable tech stock giants or risky buys?

Did you know the "Magnificent Seven" moniker was meant as a warning, not an endorsement? Check out the risks and…

Read more »