Help me stay bullish

[LetsgoRIVN]

It does feel like the most hated EV stock for some reason, strange and I hope these short sellers will pay and get burned soon!!

In 3 days we lost all the gains from R2 , R3 reveal and 2.25bn cost saving.

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[sk00pie]

First time buyer here! Picked up 150 shares during the R2/3 reveal. I understand the company needs a ton of capital in order to survive. I just can't see a company that makes a product this good with this level off satisfaction closing it's doors. I'm willing to bet on it!

 

[Tahoe Man]

It does feel like the most hated EV stock for some reason, strange and I hope these short sellers will pay and get burned soon!!

In 3 days we lost all the gains from R2 , R3 reveal and 2.25bn cost saving.

The short sellers have been the winners.

 

[Tahoe Man]

First time buyer here! Picked up 150 shares during the R2/3 reveal. I understand the company needs a ton of capital in order to survive. I just can't see a company that makes a product this good with this level off satisfaction closing it's doors. I'm willing to bet on it!

They have to make money. A company can make a great product and their customers love it, but that doesn't mean the company survives.

 

[Sgt Beavis]

CNBC's "EV Euphoria is Dead", Fisker looking at bankruptcy, Wells Fargo downgrades Tesla, etc., etc. Right now, the EV industry is pushed by bad news. Buy the dip if you're committed.

 

[sk00pie]

They have to make money. A company can make a great product and their customers love it, but that doesn't mean the company survives.

Right of course. The product is incredible in my opinion. I think if they get over this hump they'll be able to up volume with R2, decrease cost, get on the right path.

 

[sphereobject]

This is not financial advice, but it appears that it is mathematically unlikely that Rivian could generate a profit without the Georgia plant.

Bottom line is delaying the Georgia plant appears to be a bad strategic move for the future of Rivian as a standalone company. Delaying the Georgia plant is likely just a move to plan an exit in the form of a takeover.

Even if Rivian could pull 20% gross margins on R2 (there is no way they will pull gross margins of 20% on R2) at a $60,000 price point (it is unlikely the average price of the R2 at volume will be $60k) and they sold 100,000 units per year (it is unlikely they will be able to ramp to 100,000 units in the foreseeable future at Normal), they still will not be cash flow positive as an enterprise.

$60,000 x 20% = $12,000 gross profit per R2
$12,000 x 100,000 = $1,200,000,000 ($1.2 Billion)

Can anyone refute this simple math?

Assuming Rivian's costs stay stagnate as they ramp production of the R2 (not possible), even with these numbers they would probably not even be able to cover one single quarter of losses with a year of R2 gross profit, at full production volume! Because they will burn all remaining cash from now until the end of 2025, and when they introduce R2 it will not meaningfully decelerate operating losses, the future is clear.

If Rivian wants to continue its existence as a standalone company, it should take advantage of today's frothiest market of all time to raise another $5+ billion now, TODAY, and use that capital to quickly ramp the Georgia plant so it can manufacture R2s and R3s at a volume sufficient to support Rivian as a going concern. By not doing so they are throwing in the towel now and planning a strategic exit. It appears that anyone with 45 seconds and a spreadsheet (leaving hopes and dreams outside) would reach the same inevitable conclusion. There does not appear to be a reasonable non-emotional counterargument.

The only light at the end of the tunnel by delaying Georgia is it makes Rivian a more attractive pre-bankruptcy takeover target (Mercedes-Benz?).

PS: I own a R1S Quad and hope there is a company there in 4.6 years to honor the 5 year warranty.

 

[MGA]

I think after 5-10 years 2 main players will be left: Tesla and Rivian. Tesla for Republicans, and Rivian for Democrats (joke). )

 

[Count Orlok]

The Count, as everyone knows already, doesn't care what this or next quarter brings. The Count's investment strategy is to always be invested for the long run... and to never forget that in the long run we're all dead.

 

[fbkr]

This is not financial advice, but it appears that it is mathematically unlikely that Rivian could generate a profit without the Georgia plant.

Bottom line is delaying the Georgia plant appears to be a bad strategic move for the future of Rivian as a standalone company. Delaying the Georgia plant is likely just a move to plan an exit in the form of a takeover.

Even if Rivian could pull 20% gross margins on R2 (there is no way they will pull gross margins of 20% on R2) at a $60,000 price point (it is unlikely the average price of the R2 at volume will be $60k) and they sold 100,000 units per year (it is unlikely they will be able to ramp to 100,000 units in the foreseeable future at Normal), they still will not be cash flow positive as an enterprise.

$60,000 x 20% = $12,000 gross profit per R2
$12,000 x 100,000 = $1,200,000,000 ($1.2 Billion)

Can anyone refute this simple math?

Assuming Rivian's costs stay stagnate as they ramp production of the R2 (not possible), even with these numbers they would probably not even be able to cover one single quarter of losses with a year of R2 gross profit, at full production volume! Because they will burn all remaining cash from now until the end of 2025, and when they introduce R2 it will not meaningfully decelerate operating losses, the future is clear.

If Rivian wants to continue its existence as a standalone company, it should take advantage of today's frothiest market of all time to raise another $5+ billion now, TODAY, and use that capital to quickly ramp the Georgia plant so it can manufacture R2s and R3s at a volume sufficient to support Rivian as a going concern. By not doing so they are throwing in the towel now and planning a strategic exit. It appears that anyone with 45 seconds and a spreadsheet (leaving hopes and dreams outside) would reach the same inevitable conclusion. There does not appear to be a reasonable non-emotional counterargument.

The only light at the end of the tunnel by delaying Georgia is it makes Rivian a more attractive pre-bankruptcy takeover target (Mercedes-Benz?).

PS: I own a R1S Quad and hope there is a company there in 4.6 years to honor the 5 year warranty.

Broadly speaking I agree that they won't be able to reach net income profitability with just Illinois given their current cost structure.

That said:

* You are omitting any potential gross profit contribution from R1/Vans if they can turn that around.
* The overall market may be frothy but Rivian's stock is in the toilet, making capital raises tricky. $5bn would be 50% of their market cap.
* R2s could potentially be 150+k units in Illinois if R1/Vans don't grow from here.

 

[fyton2v]

This is very much part of my worry. Fab that the current plan gets them to an R2 production line in Normal, but it seems unlikely they'll produce enough vehicles there. So they end up postponing the inevitable; they still need to find some cash. At least they'll have a longer runway to do just that. And perhaps they can make enough R2s to generate more public interest.

This is not financial advice, but it appears that it is mathematically unlikely that Rivian could generate a profit without the Georgia plant.

Bottom line is delaying the Georgia plant appears to be a bad strategic move for the future of Rivian as a standalone company. Delaying the Georgia plant is likely just a move to plan an exit in the form of a takeover.

Even if Rivian could pull 20% gross margins on R2 (there is no way they will pull gross margins of 20% on R2) at a $60,000 price point (it is unlikely the average price of the R2 at volume will be $60k) and they sold 100,000 units per year (it is unlikely they will be able to ramp to 100,000 units in the foreseeable future at Normal), they still will not be cash flow positive as an enterprise.

$60,000 x 20% = $12,000 gross profit per R2
$12,000 x 100,000 = $1,200,000,000 ($1.2 Billion)

Can anyone refute this simple math?

Assuming Rivian's costs stay stagnate as they ramp production of the R2 (not possible), even with these numbers they would probably not even be able to cover one single quarter of losses with a year of R2 gross profit, at full production volume! Because they will burn all remaining cash from now until the end of 2025, and when they introduce R2 it will not meaningfully decelerate operating losses, the future is clear.

If Rivian wants to continue its existence as a standalone company, it should take advantage of today's frothiest market of all time to raise another $5+ billion now, TODAY, and use that capital to quickly ramp the Georgia plant so it can manufacture R2s and R3s at a volume sufficient to support Rivian as a going concern. By not doing so they are throwing in the towel now and planning a strategic exit. It appears that anyone with 45 seconds and a spreadsheet (leaving hopes and dreams outside) would reach the same inevitable conclusion. There does not appear to be a reasonable non-emotional counterargument.

The only light at the end of the tunnel by delaying Georgia is it makes Rivian a more attractive pre-bankruptcy takeover target (Mercedes-Benz?).

PS: I own a R1S Quad and hope there is a company there in 4.6 years to honor the 5 year warranty.

 

[s0ysauce]

I'm no financial expert, but every time it dips, I buy more. I'm not saying I'm not worried, but out of all the pure EV companies with vehicles on the road, Rivian is the one I consider to be the next big thing. Everything I'm seeing from them: to the amount of them on the road, and to speaking to the drivers in parking lots; there is excitement with the brand and it's halo vehicle. It has a lot of similarities to when Tesla started selling the Model S. The company didn't thrive until the Model 3 and are extremely profitable with the Model Y.

Is there uncertainty now, absolutely. But if they can survive until the R2 is on the road, the company will be in better shape and hopefully you won't be so underwater with your positions. The way I handled the stock being so turbulent is I distracted myself by getting into other positions to offset this that are more....exciting? It took me 8 years of holding the bag, but my AMD positions crossed 1000% this year. Should I have bought Nvidia 8 years ago instead of AMD, yes no doubt. But overall it's going to be alright. Rivian will be fine.

 

[Tahoe Man]

Right of course. The product is incredible in my opinion. I think if they get over this hump they'll be able to up volume with R2, decrease cost, get on the right path.

The huge huge thing here is decrease costs. Usually there will be compromises with quality too.

I like the R2 also, I wish they started with the SUVs and never had a truck, but that's water under the bridge.

There is just so much competition and making and selling vehicles is very cost intensive. Investors don't have much confidence at this time, frankly they've been correct the whole time. With the big boys scaling back EV development, Tesla stock trending downward, i don't have much confidence either.

 

[sk00pie]

The huge huge thing here is decrease costs. Usually there will be compromises with quality too.

I like the R2 also, I wish they started with the SUVs and never had a truck, but that's water under the bridge.

There is just so much competition and making and selling vehicles is very cost intensive. Investors don't have much confidence at this time, frankly they've been correct the whole time. With the big boys scaling back EV development, Tesla stock trending downward, i don't have much confidence either.

Totally agree. I just believe so much in the product and feel that others see it as well. I can't picture a situation they don't get scooped up or raise cash. I'm in it for the long haul. From an investment standpoint it's a total stupid gamble, which is why it's my only stock I own and only 150 shares. I'm all about super safe boring index funds, this was an emotional impulse by.

 

[sphereobject]

Broadly speaking I agree that they won't be able to reach net income profitability with just Illinois given their current cost structure.

That said:

* You are omitting any potential gross profit contribution from R1/Vans if they can turn that around.
* The overall market may be frothy but Rivian's stock is in the toilet, making capital raises tricky. $5bn would be 50% of their market cap.
* R2s could potentially be 150+k units in Illinois if R1/Vans don't grow from here.

If someone came to you with a business plan with post-R2 production at Normal, that showed you just burned $15 billion in debt and equity, you're still not profitable, and to be profitable you need to raise $5-$7 billion more and wait 3 years to build a new plant in Georgia, and while you're waiting those 3 years you are going to lose billions more, would you contribute capital to that company? Would you really?

I am friendly with a former CEO of a former B2B .com that went bankrupt in the .com crash. He tells a story just like Rivian's. They were burning cash furiously but growing revenue at a blockbuster rate. Weeks before the .com bust began (the world did not know the .com would begin), the company had lined up to raise billions in a secondary that would have likely given them the runway to survive and thrive during the .com bust. The deal was 100% ready to go, just push go and billions more in cash was on the balance sheet, but the equity would be diluted by 35%. At the 11th hour, the board voted down the equity raise. 18 months later the company was liquidated in bankruptcy. To save 35% of their equity, they lost 100% of their equity. This former CEO says that every day he thinks about this and how greedy they were to not do the deal they had fully baked. His biggest regret of his life.

Rivian's new plan to build R2 at Normal does not appear to be a medium or long term strategy. It appears to be an exit strategy. If they have an exit strategy (an acquisition) already negotiated, then great!

Truthfully, Rivian did all of this backward. After they raised $12 billion in the IPO, they should have had the discipline to slash OPEX and should have tabled series production of the R1xs (and focused on the delivery truck commitments). If they knew they were going to lose $40k-$60k per car (they knew it), you push STOP immediately. Once the $12 billion was raised, they did not have to show the world they could produce a car at scale. With discipline, with the cash on hand they could have built Georgia.

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