Ford "PRICE WAR" drives RIVN under $10

[LetsgoRIVN]

I mean I own one. That’s why I’m here. I love it. Rivian will be a great manufacturer and a successful company. The cars do have good tech, but that doesn’t mean that you should treat their company as a tech growth stock.

I mean look at other tech growth stocks - alphabet, Microsoft, Apple, Amazon, etc. Yes, they all develop tech, but what makes them growth stocks is that they have core competencies that they can expand into multiple other verticals.

What does Rivian have that they can use to expand into other businesses? I don’t see anything right now, which means we should expect them to grow and be valued like a car manufacturer and likely not the biggest car manufacturer either (they’ll probably never be a toyota, for example). So there’s some upside, but not insane upside. And it’s a long road to reach that upside too.

I disagree, the core competence of Rivian is its tech and its business model ( like Tesla) with no middle man for example. 25% gross margin and 10% free cash flow if achieved is not a car manufacturer, let’s say they are in between high tech and car manufacturers

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[Dustyshades]

I disagree, the core competence of Rivian is its tech and its business model ( like Tesla) with no middle man for example. 25% gross margin and 10% free cash flow if achieved is not a car manufacturer, let’s say they are in between high tech and car manufacturers

yeah, but how do you expand that core competency further. Again, that’s great. They’ll be a successful player in the EV space, not questioning that. But there’s no expansion outside of that. And I don’t think that there needs to be.

But people talking about going to the moon or some crazy growth trajectory for the stock are just delusional. There’s no current path for that and it’s unlikely there ever will be.

Like I realize I’m falling on deaf ears here because a lot of people probably bought the stock at its peak and have shed over 90% of initial investment resulting in some hefty endowment effect bias. It would take an absolute miracle to even get back to that initial post IPO stock price any time in the next 20 years.

And Tesla is such a terrible example because they’ve been buoyed primarily by musk cult retail investors. Super over valued and will come down eventually and also not something that can be replicated. (Even still though, they have a meaningful first mover advantage and are at least trying to expand into other growth businesses even though I think those expansion opportunities are dumb and probably not going to yield anything).

 

[LetsgoRIVN]

yeah, but how do you expand that core competency further. Again, that’s great. They’ll be a successful player in the EV space, not questioning that. But there’s no expansion outside of that. And I don’t think that there needs to be.

But people talking about going to the moon or some crazy growth trajectory for the stock are just delusional. There’s no current path for that and it’s unlikely there ever will be.

Like I realize I’m falling on deaf ears here because a lot of people probably bought the stock at its peak and have shed over 90% of initial investment resulting in some hefty endowment effect bias. It would take an absolute miracle to even get back to that initial post IPO stock price any time in the next 20 years.

And Tesla is such a terrible example because they’ve been buoyed primarily by musk cult retail investors. Super over valued and will come down eventually and also not something that can be replicated. (Even still though, they have a meaningful first mover advantage and are at least trying to expand into other growth businesses even though I think those expansion opportunities are dumb and probably not going to yield anything).

The goal is to sell about 1million cars a year, Avg price let’s say 50k = 50bn in revenue , 10% FCF would be 5bn and if I take Toyota P/FCF of 30 (since you used Toyota ) that would give you a market Value of 150bn! Which is at least 15X the price now. Ofcourse this won’t happen in the next couple of years but 5yrs is doable.

Now it’s all about proving the sound of the plan and it’s execution to the market, this starts with Q4 2024, if Rivian reaches positive Gross Margin confidence will build and the narrative will change.

 

[Dustyshades]

The goal is to sell about 1million cars a year, Avg price let’s say 50k = 50bn in revenue , 10% FCF would be 5bn and if I take Toyota P/FCF of 30 (since you used Toyota ) that would give you a market Value of 150bn! Which is at least 15X the price now. Ofcourse this won’t happen in the next couple of years but 5yrs is doable.

Now it’s all about proving the sound of the plan and it’s execution to the market, this starts with Q4 2024, if Rivian reaches positive Gross Margin confidence will build and the narrative will change.

1) those are hypothetical, we’ll see when they hit 1 million cars. They will for sure need the Georgia factory to do that and that factory may only just be getting to the point of full ramp in 5 years at the current pace (even that is aggressive).

2) of course you picked Toyota as a comp and pulled out the most favorable ratio to get to the valuation you wanted. Toyota is a completely different company. For one, their car business is currently very profitable. But additionally they do a ton of other stuff beyond just car manufacturing, which goes back to my original point that to get that kind of valuation you need to expand to growth opportunities outside of just making and selling cars.

Thank you for proving my point though. And it’s cool, I know you have to talk yourself into these kind of scenarios since you are so far down at this point. I don’t blame you at all

 

[LetsgoRIVN]

1) those are hypothetical, we’ll see when they hit 1 million cars. They will for sure need the Georgia factory to do that and that factory may only just be getting to the point of full ramp in 5 years at the current pace (even that is aggressive).

2) of course you picked Toyota as a comp and pulled out the most favorable ratio to get to the valuation you wanted. Toyota is a completely different company. For one, their car business is currently very profitable. But additionally they do a ton of other stuff beyond just car manufacturing, which goes back to my original point that to get that kind of valuation you need to expand to growth opportunities outside of just making and selling cars.

Thank you for proving my point though. And it’s cool, I know you have to talk yourself into these kind of scenarios since you are so far down at this point. I don’t blame you at all

Toyota has Gross margin of 18 and FCF margin of 3 (not impressive)!
I didn’t prove none of your point, you didn’t read what I said and you just want to be right lol. I said Q4 is the turning point and if Rivian shows a positive gross margin as expected it means they really know what they are doing and the market would give way more benefit than now.

 

[M3_R2]

I cautiously dipped my toes in today. Not expecting much, esp in the near term. Would be very happy with mid-teens by 2027 when I buy an R2 but mostly just for the fun of following their journey.

 

[Dustyshades]

Toyota has Gross margin of 18 and FCF margin of 3 (not impressive)!
I didn’t prove none of your point, you didn’t read what I said and you just want to be right lol. I said Q4 is the turning point and if Rivian shows a positive gross margin as expected it means they really know what they are doing and the market would give way more benefit than now.

You did prove my point because Toyota has a ton of other businesses outside of auto manufacturing which is why their valuation is like 4 to 6 times larger than most other auto manufacturers. Convenient how you purposefully are ignoring it his important fact that I’ve explicitly called out multiple times.

 

[Nix]

The price dropped below $10 because of the idea of Ford, Chevy, and soon RAM doing what they always do -- compete with each other on price.

Then it dropped to around $9.50 just because the price dropped below the magical $10 mental price limit where more people wanted to sell just because it was now under $10.

The Ford price cut alone wasn't responsible for the whole price movement. So now does it rebound, or does it dead-cat bounce and head lower? Hard to tell. But not too many people were going to be buying as it dropped from $10 to $9.50.

I don't expect any upward movement to really stick until if/when R2 and R3 successfully launch, scale ramp-up, and show profits. Wild ride ahead.

 

[LetsgoRIVN]

You did prove my point because Toyota has a ton of other businesses outside of auto manufacturing which is why their valuation is like 4 to 6 times larger than most other auto manufacturers. Convenient how you purposefully are ignoring it his important fact that I’ve explicitly called out multiple times.

Believe what you will but I didn’t prove any of your point! Tesla is a car company and it’s valued 2X toyota you claim to be very profitable ?. It’s all market perception of the future and once they see that future after Q4 then you will understand!

 

[Rivian Head]

There is not a single auto company that I would consider buying. Price war and heavily subsidized Chinese EV companies will bring their margin to razor thin level. I bought Tesla stock because of FSD licensing. lure of Robotaxi, energy storage and robotics. Wonder why Apple decided to abandon their Project Titans?

 

[Gen(R3)Xer]

"RIVN stock slid 6.7% through noon ET on Thursday -- but not because of any mistake that Rivian made.

This time, the blame belongs to Ford Motor Company (NYSE: F), which just declared a price war in electric trucks, and turned Rivian stock into roadkill in the process.

Have you driven a Ford lately? (Because it's cheaper than it used to be)
Any day now, Ford archrival General Motors (NYSE: GM) will begin selling its new Silverado EV electric pickup truck in competition with Ford's F-150 Lightning. Ford saw its automotive rival inching closer in the rearview, however, and is gunning the motor to stay ahead -- lowering the price of some F-150 Lightning models by as much as $5,500, as CarsDirect.com reported this week.

It's not entirely clear whether this move will be enough to maintain Ford's lead over Chevy. Notably, the lowest-trim "Pro" F-150 Lightning still costs a pricey $54,995, and the most expensive "Platinum" Lightning still costs a nosebleed $84,995. (Price cuts are all on the mid-tier vehicles). What is clear is that Ford's pre-emptive strike at Chevy, and the price war it foreshadows, seems to be spooking investors in Rivian."

Rivian needs to promote those reengineered R1s as soon as they can. Maybe even take pre-orders. The whole EV sector is taking a beating.

 

[R1TS]

The goal is to sell about 1million cars a year, Avg price let’s say 50k = 50bn in revenue , 10% FCF would be 5bn and if I take Toyota P/FCF of 30 (since you used Toyota ) that would give you a market Value of 150bn! Which is at least 15X the price now. Ofcourse this won’t happen in the next couple of years but 5yrs is doable.

1 million cars a year is doable by Rivian within 5 years you say?

Someone is a super optimistic super fan.

 

[R1TS]

I disagree, the core competence of Rivian is its tech and its business model ( like Tesla) with no middle man for example. 25% gross margin and 10% free cash flow if achieved is not a car manufacturer, let’s say they are in between high tech and car manufacturers

What specifically about any of the tech Rivian uses makes you think it is their core competency? Honestly curious.

 

[LetsgoRIVN]

What specifically about any of the tech Rivian uses makes you think it is their core competency? Honestly curious.

The tech itself !

 

[Zoidz]

What specifically about any of the tech Rivian uses makes you think it is their core competency? Honestly curious.

Enduro Motor. A startup developing and building an EV motor in house with full vertical integration is a core competency.

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