Rivian Poised For a "to Mars" Leap
"It is not often that an initial public offering (IPO) interests me. Most of the time there is a lot of initial hype which just drives the stock price to the moon, only to come crashing down to reality at some point in the not so distant future.
And really, that's the best time to buy. When the calm arrives and the stock starts trading closer to its true value."
Excerpt from Rivian Is Poised To Be the Best Investment of 2021 (read.cash) by Porwest.
It was only a short while ago, one month to be exact, that electric automaker Rivian went public in the stock market, and it has been an interesting ride, pardon the pun, since then.
Of course, I said it was poised to be the best investment of 2021. That is to say, it would be the best investment of 2021 if you bought the stock in 2021.
The thing is, it is not necessarily about what the stock did or does before the year end. Actually, it had a nice initial start compared to other IPO's I have watched or been part of in the past. Rivian was much less rocky, so to speak. I continue to think that despite its first big stumble since going public.
The part that is and was important to Rivian being the best investment of 2021, for those who participated initially, is that the seed had been planted.
You have to remember that even though Rivian has only been publicly traded for the past month, it is a company I have had my eye on for roughly three years. And that's saying something if you think about it. Because the fact is that before Rivian I did not have any interest whatsoever in this space, and there was no other electric vehicle company even on my radar.
Some might say, "Well, Porwest. What about Tesla? Didn't you kind of miss the bus already on the whole EV market?"
In part, that someone saying that could be partially correct. Tesla inarguably had a fantastic run in 2021, and despite the wild and crazy antics of the eccentric man behind the company's success story, it will likely continue to do well.
But I do not feel like I missed the bus at all. I was just waiting for the right bus.
When another company came on the scene trying to make some headway in this market, Nikola, for whatever reason I just happened to have felt there were a lot of red flags despite the niche market it seemed to be wanting to go after.
Mostly material transport.
The thing is, I just don't feel that we are quite ready for that market just yet. Especially if we couple that concept with the idea of self-driving technology which, let's be fair, I think is extremely problematic and even that Tesla really hasn't quite figured out yet regarding their passenger vehicles.
Do we really want automation in our driving experience? I think it is an interesting idea to entertain. But at the same time I still think most cars are marketed for their driving experience.
I think there are a ton of safety concerns with the whole self-driving thing to consider as well. But that's for another day.
Lordstown Motors was a bit closer, I felt, to what might help to better define the EV market space. But Rivian? It's just a totally different company with a totally different marketing strategy and a totally different audience.
Rivian is marketing vehicles people actually want. Moreover, they are marketing the driving experience.
If you think about one of the chief complaints about Tesla most people have, aside from those who actually own a Tesla, it is that it's just not all that aesthetically appealing. Both from the perspective of interior and exterior—it's just blah.
People are not buying Tesla cars because they look good or are luxurious, or otherwise desirable from the perspective of what most car buyers are looking for. People are buying Tesla cars simply because they are a Tesla.
Don't get me wrong. People may have similar brand loyalty considerations when it comes to any vehicle purchase. The rivalry between Ford, Chevy, and Dodge in the pickup truck market, for example, is quite legendary.
But the fact is that what is not amiss in the consideration in the purchase of any of these traditional vehicles is the entire experience around driving these vehicles.
It is simply a different buyer when it comes to Teslas. If you really think about it, the Tesla buyer isn't really interested in buying a vehicle at all. He just wants to own the technology, the concept and the idea. He wants to be different or be set apart from the status quo.
For that buyer it's all about the Tesla experience.
Rivian is marketing their vehicles to the buyer who is sort of interested in the idea of going electric, but still wants something that looks good, feels good, and that he will enjoy driving.
Rivian's SUV, for example, really doesn't look all that different from most other appealing SUV's you will find on the road.
On top of that, much like I cited in my previous article on Rivian, it's got the backing of a company like Ford that knows how to build cars and trucks that people want, and a company like Amazon that understands technology.
I think this helps to separate Rivian from all of the other contenders in this field. And I say this even as it is publicly known that the marriage between the three companies is, right now, sort of still in their first phase of dating.
Not committed to anything. Just beginning to develop an interest in each other and seeing where that relationship ultimately might take them somewhere down the road.
It is also definitely interesting to explore what a marriage of these companies might offer, and easy to see how it could happen.
I said before, in the previous article, that sedans are a bit of a dying market when it comes to the traditional vehicle market. Trucks, SUV's and crossovers rule consumer demand. Tesla's primary market is the sedan.
On top of that, Tesla's attempt at an SUV met with very little interest and can truly be classified as a failure. And while there has been some interest in their truck, the fact is that it is ugly, looks like something from outer space, and will only appeal to a very tiny portion of the buying public. It is simply not something practical.
Considering the nature of the truck market specifically, nothing about Tesla's truck appeals to that market. Quite frankly, I am not even sure it will appeal to their own customer base on the basis of the why of a Tesla owner I talked about earlier.
This is not to say that Tesla will not continue to be a successful business. It's just going to have a limited market similar to exotic cars and Rolls-Royce. Only certain people are going to want to actually own them.
But again, that's why Rivian has so much appeal to me as a company, and why I see it as a true automaker who just so happens to be in the business of making electric ones.
Rivian is marketing sleekness, luxury design, utility, practicality and even aims toward affordability eventually. Their SUV, the R1S for example, is something that could be practical for families.
This becomes even more apparent because of course Tesla cars require specific Tesla charging stations in order to recharge the batteries. Rivian is along with all other automakers making electric vehicles to use a standard and universal charging apparatus.
In other words, if you own a Rivian you can use the same charger you would use to recharge a Ford, a Chevy, a Toyota, a Volvo or any other vehicle. If you own a Tesla, you are going to have to make sure you can recharge with a Tesla charger.
Versatility of charging means more available places to charge, means more practical opportunity to recharge conveniently, thereby increasing range by virtue of that. And quite possibly, it might also mean a recharge is more economical as well since there will be more vehicles charging on a standard charger than a Tesla specific one.
Imagine this as we shifted from leaded fuel to unleaded fuel. Less and less leaded fuel was eventually available, making people who still ran their cars on leaded gas have to look harder for leaded fuel—and some had to pay more buying lead additives they could add to their unleaded fuel purchases so they could still get around in their cars.
In more ways than one, Tesla is simply painting itself into a corner.
Rivian is not. And on top of that, the other companies in the field simply don't have the backing that Rivian does, the proven track record and appeal that Rivian does, the types of vehicles Rivian does that will have wider consumer appeal, among a variety of other factors that are positive to consider. Including the 100,000 delivery vans they will deliver to Amazon by 2030 that could appeal to a very vast commercial market if it is successful.
The bottom line for me is that despite the significant dip in Rivian stock—and let's face it, it could drop more—it is a buy in my opinion. The dip falls right in line with what I suspected it would do as well. In other words, the stock so far is not underperforming my expectations. And I continue to add shares.
Plus, on a recent road trip I took to Iowa, I also happened to have spotted a car carrier loaded up with SUV's and trucks parked at a rest stop. So, the vehicles are real, production is happening, and vehicles are being delivered to buyers.
What's more, have I ever seen anything from Lordstown or Nikola on the road? No. And even if I have not seen a Rivian on the road yet, I am sure that I will.
Like I said, I was just waiting for the right electric vehicle maker to enter the market before I was ready to put any money into this space, and Rivian was it. My goal remains to put at least $10,000 into the company. But longer term I am going to be shooting for $20,000-$30,000. In five years seeing the share price around $1,000, to me, is entirely possible.
For so many reasons I tend to have a strong feeling, and it is not an emotional one, that not only was Rivian the best investment to make in 2021. It is the best investment I will ever make in my life.
For whatever it is worth, being a strong Ford guy, it is entirely plausible as well that, for me, while it would not overtake my love of the Ford F-150, which I will always drive, that a Rivian may eventually be at least one of the vehicles in my driveway.
If this is going to drop more, then buy later, when it is buy the dip.