The looming recession & your place in line for a Rivian [WARNING: NO POLITICS]

[p3ck]

Nothing but good news....happy Friday

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[R_1_T]

Agree with @ yizzung.

Typically one of three things proceed a recession: tightening Fed, inflation, inverted yield curve. We have all three. Add global conflict, and a hangover from 15 years of wildly accommodative monetary policy which inflated all valuations across the globe.

You also forgot the broken supply chains, a border invasion, and "leadership" that has their collective heads up their asses.

 

[yizzung]

We’re in similar space and probably looking at the same indicators and seeing they’re all flashing red. Unemployment below four and inflation above four means recession to me…We’ve got a real inflation problem and will for some time. There will be pain.

Does that mean a level of pain that frees up the waiting list or the pain that dries up a conservative burn rate for a auto company will a multi billion dollar burn rate? My tin foil hat is for protection, not prediction?…

Well, I suspect we're seeing evidence of pain already with some of these random lottery vehicles. Rivian has already built some number of trucks for people who couldn't get financing. Probably very small #s so far but we're at the front end of fed tightening, not the back end. The market's priced in three half-point hikes three months from today but the market has been behind and inflation came in very hot today. If the fed does a 3/4-point or full point at the next meeting, look out.

 

[SANZC02]

Any chance Rivian is doing this on purpose.

I don’t think so, they need the cash coming in to offset their burn rate. There is really no benefit to slow playing the production rate even at the lower prices. At this point it is not about profit but cash flow.

 

[yizzung]

I don’t think so, they need the cash coming in to offset their burn rate. There is really no benefit to slow playing the production rate even at the lower prices. At this point it is not about profit but cash flow.

Agree. They aren't slow playing anything. Hell, they might start a scratch-and-dent sale soon for things that roll off the assembly line that are less than perfect...

The R1Shop is an inventory clearing tool. I think they only recently figured out that they needed to build one, which is why it's late to the game.

 

[Count Orlok]

Both Elon and Jamie Dimon (fellow billionaire and Chairman of the Board/CEO JP Morgan Chase) have both recently been quoted as having very dire outlooks for the near term (8mo+) US and global economy.

Do we simply ignore the opinions of these two sage investors?


Two good things about the extended Rivian delays is later delivery customers get less buggy vehicles and we also get more time to squirrel away $$ for our down payment. If my delivery actually takes place as "promised" in Q4 this year, I should only need to finance less than $20k which is pretty easy to pay off monthly.

Recessions are a normal part of the business cycle and one should always be prepared for one and for black swan events. I don't see any need to make any major change to our investment strategy, recession or not. It also will not impact my purchase of a Rivian s00n.

 

[Count Orlok]

Ok, ya, I’m not dissimilar, but rising rates hurts 70% of that allocation and inflation eats at it all. For the cash, a 1% interest rate into 9% inflation isn’t really helpful.

Your only safe bet is the scotch. 100% ROI on that one.

I hear you but I'm not about to put more in equities and I already have more property than I want. Inflation is also something very personal depending on your spending patterns. Not everyone drinks 5 gallons of milk a day or cares about price increases at theme parks.

 

[Count Orlok]

Well 30 year mortgage rates have nearly doubled from the low of December 2020. There is pretty much no way we are getting a soft landing from this mess and really it's one of those things that seems so obvious you think maybe it can't be true.

I think two big factors will hit Rivian pre-orders......a number of buyers will drop out for financial reasons and a very large number of buyers have multiple vehicle reservations and orders (I have SEVEN including a Dec' 2018 R1T) -- many of them will end up with something other than a Rivian.

Let's not forget that mortgage rates doubled from very low levels and are still much lower than my first mortgage back in the dark ages.

I'm sure some people will fall out of the RIVN line but so to are the people who have DIED waiting >1,000 days...

 

[LaunchGreen]

I hear you but I'm not about to put more in equities and I already have more property than I want. Inflation is also something very personal depending on your spending patterns. Not everyone drinks 5 gallons of milk a day or cares about price increases at theme parks.

Fair enough: those that can avoid food, shelter, oil & gas, electricity, furniture, electronics, services, household products, travel and vehicles should be relatively untouched. (I just listed to most affected categories)

 

[Davethadog]

I think the longer Rivian takes to convert pre-orders to sales, the lower the conversion rate will be on those pre-orders.

I think you're dead on with that. There are so many other good options now and coming soon. Not everyone needs a truck.

 

[Guy]

Well, I suspect we're seeing evidence of pain already with some of these random lottery vehicles. Rivian has already built some number of trucks for people who couldn't get financing. Probably very small #s so far but we're at the front end of fed tightening, not the back end. The market's priced in three half-point hikes three months from today but the market has been behind and inflation came in very hot today. If the fed does a 3/4-point or full point at the next meeting, look out.

Very true and people a few months back we’re wondering what the conversion rate would be on the 71k preorders as of late last year. Some obviously fell through for whatever reason and I expect that % to increase during this year.

 

[Dark-Fx]

I agree with your prediction. I think we will see a recession starting in Q4 of this year.

I didn't know we were in Q4 already

 

[R1Sky Business]

I didn't know we were in Q4 already

The Rivian fiscal year has 8 quarters

 

[Honey]

My husband and I work for the (local and federal-DOD)government, our jobs are secure. Not worried about the ression, being a millennials we are just used to having shitty economies.

 

[Gator42]

being a millennials we are just used to having shitty economies.

...you don't know shitty.

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