Rivian Automotive (RIVN 4.42%) shares commerce at a major low cost to friends equivalent to Lucid Group and Tesla. But the electrical car (EV) maker’s gross sales have enormous development potential, with a gross sales inflection level possible occurring throughout the subsequent 12 months.
However earlier than you bounce into this promising EV inventory, ensure you perceive the 2 numbers mentioned beneath.
These numbers may have an enormous impact on Rivian’s inventory
As you may see within the charts beneath, Rivian shares now commerce at simply 2.2 instances gross sales — a substantial low cost to rivals like Tesla and Lucid Group.
But, the corporate is anticipating to launch three new mass market autos subsequent yr, with manufacturing slated for early 2026. These autos are anticipated to be priced beneath $50,000, crossing a important value threshold that can make Rivian’s autos extra inexpensive to hundreds of thousands of recent consumers. Proper now, its two present fashions are priced at $70,000 and above.
When Tesla launched its mass market autos — the Mannequin 3 and the Mannequin Y — its gross sales doubled or tripled within the years that adopted. The identical might show true for Rivian. However why, then, are Rivian’s shares priced at such a reduction?
RIVN PS Ratio information by YCharts. PS = price-to-sales.
Wanting 12 months down the street, Rivian’s gross sales base is definitely anticipated to stay roughly flat, with shares buying and selling at an identical 2.5 instances ahead gross sales. So even based mostly on future development charges, shares are deservedly low-cost. However these estimates solely embrace the subsequent 12 months. Rivian’s new fashions are anticipated to debut simply earlier than that point horizon ends, with no less than one other few quarters wanted to see gross sales attain their full potential.
Proper now, the market is not pricing in a lot development for Rivian inventory as a result of this development is anticipated to happen past most analysts’ forecasts. That is why traders ought to keep watch over each Rivian’s price-to-sales ratio and its full-year development estimates. As soon as these estimates begin to embrace gross sales from Rivian’s mass market autos, we should always see the inventory’s valuation decide up relative to Lucid’s and Tesla’s valuations.
Ryan Vanzo has no place in any of the shares talked about. The Motley Idiot has positions in and recommends Tesla. The Motley Idiot has a disclosure coverage.
