Tesla Investor Shows Love For Battered Rivian: 4 Reasons Why He Is Positive About The EV Maker

Rivian Automotive, Inc. RIVN stock was down over 8% intraday on Friday, over and above the 25.60% loss it incurred in the previous session on back of dismal 2024 production guidance.

Tesla investor and Future Fund co-founder and Managing Partner Gary Black on Thursday defended the company as one that can potentially become the number two electric-vehicle maker, behind the Elon Musk-led company.

Potential To Be Number 2: Black called upon Tesla investors to root for a strong number-two non-ICE player to help the company to accelerate the world’s transition to sustainable energy. The fund manager said Rivian has a high quality product, brand recognition, execution skills, lack of legacy ICE baggage, and competitive conditioning.

Rivian can happily co-exist with Tesla to be that strong number-two player by 2030, he said. Rivian’s brand took the top honors in owner satisfaction, based on Consumer Reports’ survey, with 86% of customers saying they would buy it again, he noted.

Black also said Rivian competes in just pickups and SUVs, the auto industry's two most profitable segments.

General Motors Corp. GM, Ford Motor Co. F, Volkswagen AG VWAGY and BYD Co. Ltd. BYDDY do not have it in them to be that credible number two, the fund manager added.

See Also: Best Electric Vehicle Stocks

Cash Position: The Irvine, California-based EV maker will likely to be gross-margin positive by the fourth quarter, Black said, adding that the company’s cash bleed will drop significantly exiting 2024. He also shrugged off concerns regarding capital adequacy.

The Irvine, California-based company has never had any trouble raising capital, the fund manager said. He also noted that the company had $9.4 billion in cash and marketable securities, exiting the fourth quarter.

M&A Probability High: Black also flagged the probability of Rivian’s electric delivery van customer Amazon, Inc. AMZN buying Rivian. Even at a 50% premium, Amazon can buy Rivian out for a “rounding error,” he said. He noted that Rivian’s enterprise value would be under $10 billion compared to Amazon’s $1.8 trillion market cap. At the end of 2023, the e-commerce giant had cash and short-term investments of $87 billion, he added.

Upcoming Catalyst: Rivian shares currently traded at 1.5 times 2023 revenue compared to 6.2 times for Tesla, Black said. He also sees the upcoming R2 launch event on March 7 to be a key catalyst.

The R2 second-gen platform will put Rivian into the $45,000 to $50,000 segments, he added.

Black is among the analysts who have been calling for Tesla to expedite the launch of the Model 2 next-gen platform EVs, which will likely have a sub-$30,000 price point.

Future Fund Active ETF FFND, the actively-managed exchange-traded fund floated by Black’s fund, owns 3,700 Tesla shares valued at $730,417, and 20,852 Rivian shares valued at $238,755.

At last check, shares of Rivian were down 7.9% to $10.54, according to Benzinga Pro data.

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Related Link: Tesla CEO Elon Musk Says Rivian Exec Team Needs ‘To Live In The Factory Or They Will Die’

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