EV startup Rivian Automotive, Inc. RIVN went public in early November by offering 153 million shares at $78 a share, giving it a massive initial public offering valuation of over $100 billion.
The irrational exuberance seen in the initial few days of trading lifted the stock to a high of $179.47. Since then, the stock has pulled back amid profit taking, abetted by concerns over stretched valuation and macroeconomic worries.
The Rivian Analyst: Following the expiry of the IPO quiet period, Wedbush analyst Daniel Ives initiated coverage of Rivian shares with an Outperform rating and $130 price target, suggesting roughly 25% upside from current levels.
The Rivian Thesis: Rivian Automotive is a "stalwart EV startup" focusing on redefining the sports utility vehicle with its innovative R1S and R1T models, analyst Ives said. The company is looking to strategically launch itself into an untapped market as SUV/ pickup truck EVs are virtually nonexistent in the EV market today, he added.
Rivian's debut vehicles, the R1T and R1S, are anticipated to launch in early 2022, competing with General Motors Company's GM all-new Hummer EV, Ford Motor Company's F F-150 Lightning, Tesla, Inc.'s TSLA Cybertruck, and on a path to disrupt the auto industry over the next decade, the analyst noted.
Related Link: 2 Reasons Why Rivian Shares Are Spiking Higher
Rivian has the potential to become one of the leaders in the EV industry over the next decade, Ives said. It already has over $10 billion in funding before going public, Amazon, Inc. AMZN as a nearly 20% owner, a vertically integrated process, 48,000 pre-orders for the R1 platform and a stable 100,000 unit delivery partnership with Amazon on the commercial front, he added.
"With the popularity and consumer demand for EVs on the trucking/SUV market, we believe Rivian is in the catbird's seat to take considerable market share in this EV arms race under its visionary CEO and founder RJ Scaringe," the analyst wrote in the note.
"We view the Rivian story as a game changer for the EV market."
Stripping off roughly $2.5 trillion of market opportunity for Tesla over the next decade, another $2.5 trillion is up for grabs, Wedbush said. Rivian, the firm said, has a strong potential to be a clear leader in this market. Therefore, the firm should be valued on a fully scaled unit number into 2025, it added.
Rivian Price Action: Rivian closed Friday's session down 5.51% at $104.67. The stock was down an incremental 0.45% at $104.20 in after-hours trading.
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