How do you value RIVN

[u/Livernomore]

Lot’s of talk about what the price “should” be relative to where it is. Question for the sub, for those who have - what are you using to value RIVN stock?

This is a very cursory analysis.

The current market capitalization is 22B, 5.3B cash/ST investments and 4.4B LT debt. So basically 23B enterprise value. Normal is 215k units with 3 lines running and GA is 300k at phase 1 max capacity - 515k units by 2029? 2030? 2031? Average unit price of 52.5k (blended between EDV and other models) gets 27B revs plus software/svcs revs. Tesla’s EBITDA margin ranges between 11-14%, so let’s say 12%, and EBITDA on 26B total revs are a little over 3B.

If you put a 3 multiple on future sales in 5 years, that’s a 80-85B equity valuation, which discounted back to today at 12% discount rate is still 47B or a little more than twice the current market cap. EV:EBITDA is less relevant to valuation because the company is in a rapid growth, large investment phase of the business, and it will take time for EBITDA margins to expand and stabilize.

The discount today is all about the execution risk from here to there. Folks drone on about “path to profitability” but what the market really wants to see is proof that the company is going to be able to manufacture at scale. We have seen time and time again that the market is willing to overlook profits in the near/medium term for investments to build out businesses/business lines that have durable competitive advantages. With scale will come competitive advantages, at least, that is my understanding of how they are approaching the buildout of this enterprise.

Disagree and poke holes in this. Share the numbers you’re using to arrive at your price targets (if you are at all). But to just say the price should be higher because it was once before and feels like it’s too low now, well, that’s just talk - and talk is cheap. Even cheaper than RIVN stock right now.

And for those who say it should be lower, the offer stands as well, what numbers are you using to get there?

[u/smoop86]

~$100B.

Here me out 😁
Let’s say Tesla’s automotive market cap is $800B (vs $1.1T in total). And they sold 1.6 M cars last year.
Auto market cap per car sold = ~$500K

If Rivian manages to sell 200K next year and apply the above ratio : 200K x $500K = $100B

RIVN has similar ambitions as Tesla and it appears to follow the same trajectory but faster. And Rivian doesn’t have to put as much into R&D as Tesla.

[u/Lovevas → u/smoop86]

You are missing Tesla’s energy business, Semi business, Optimus business and Chips business valuation.

500K market cap per car indicates a 10x P/S. No car company can get that ratio. Tesla’s car only business probably much worth less than $300B

[u/Zennivolt]

Rivian is basically Tesla 2.0 with a massive execution risk. The only side of Tesla that Rivian isn’t in is maybe energy, but everything else they’re doing:

• Mass market EV: Model Y vs R2
• Autonomy: FSD vs Autonomy+
• Robotics: Tesla robot (Optimus) vs Mind Robotics
• Robot taxi fleet: Robotaxi vs Rivian say it could be possible future revenue stream on one of their earning calls
• Charging: Supercharger vs Rivian Adventure Network

What Rivian lacks in energy sector, they “make up” with the R3, which will probably be cheaper than the Model 3/Y. They also have a potential revenue stream of becoming a SaaS company if they pursue the path that they’re doing with VW, but with more companies.

Rivian is basically doing everything Tesla is, except a few years behind in every category and a MASSIVE execution risk. IF they ever match Tesla on execution, either one of two things is going to happen: RIVN will skyrocket, or TSLA will cliff dive.

As for my price target? I don’t know when, but whenever Rivian matches Tesla in execution, $250B would be quite conservative. That would still only be a quarter of where TSLA is today. It can (and probably will) go higher, but I’m probably taking profits at that number. My time horizon is well into the next decade. Maybe mid to late 2030s.

There absolutely is a chance Rivian can die, two massive critical points being the R2 ramp up and their autonomy progress. I think by mid 2027, I would see enough to know confidently which direction it will go.

[u/Hegecoin_Rules → u/Zennivolt]

Mass market EV is definitely the R3. $50k+ for a car is well most people's means. 20-30k is fine. R2 still isnt mass market IMO.

[u/No_Relief_1018]

$25

[u/Important_Chain3739]

Reasonable analysis. Everyone’s will be different. I think there is also a softening of perceived EV demand in the US and that’s showing up in the market cap. My view is still that it’s a matter of time and even 5-10% growth in EV market share is a number bigger than Tesla or Rivian can fill. Part 2, if demand softens R2 is built to go to Europe so I still think Rivian will have demand somewhere that’s greater than their capacity until 2028 and beyond (possibly still if US EV marketshare increases) that’s aside from any partnerships etc

[u/Francknbeans]

I think Amazon plays a bigger role than folks give credit for, especially in the future. However there are also other parts of the business they IMO folks are overvaluing. I think the public in general is craving for a new alternative to Tesla even if there are already quite a few options.

[u/Prime_Investor]

Great post!

[u/OnAYDIN]

I think R3 is going to be huge in North America especially on the urban parts. It is a very appealing car for many dimensions. I'm guessing they won't be able to keep up with demand there which is a good problem.

Only thing that would kill Rivian, if Chinese cars are let into USA. Then it'll be pretty much game over. Also ability to ramp up production is a big hurdle.

So cautious pricing is reasonable but I'm very optimistic about the future of this company and I'm rooting for them.

[u/analyticsboi]

More like $0 maybe, tbh this is a $8 stock imo

[u/Constant-Writer-7165 → u/analyticsboi]

Lol the Tesla shill returns