Usually, news of a partnership with Amazon would bode well for a company’s stock. However, that hasn’t been the case for Rivian – one of the most anticipated EVs since Tesla. This automaker just went public in the last year – and while the stock hit the market at a high of $172 in November of 2021, it’s fallen 70% year to date. While there has been a slight recovery over the past few months, investors are still wondering why the stock is floundering – despite help from Amazon, Ford, and other celebrity fund manager investors. Looking at the stock objectively, VectorVest’s software has identified 3 key reasons that Rivian stock isn’t rated a buy at this time.
Let’s take a step back and talk about Rivian, in general, though. This electric automaker has been hyped up heavily since news of an Amazon partnership was delivered. Rivian received over $700 million back in 2019 from the e-commerce giant. And, Amazon still intends to purchase 100,000 custom-built electric delivery vans – as part of the company’s ongoing efforts to electrify its last-mile fleet before 2040.
Amazon isn’t the only company to see promise in Rivian. Ford – a fellow automaker – has invested about $500 million into the electric manufacturer, too. The goal of this partnership is to have Rivian deliver a new battery-powered vehicle to Ford – expanding their line of EVs.
Despite these incredibly valuable partnerships, Rivian has been plagued by many of the same problems as other automakers – along with a few unique challenges of their own. The cost of materials is way up. And, the rapidly rising rate of inflation plus a looming recession has potential buyers holding off. Nevertheless, Rivian executives claim things are going according to plan. They’ve taken over 100,000 preorders for their vehicles to date. And, they expect to reach their target of 25,000 units delivered in 2022 – with the goal of ramping up to 150,000 units.
However, from an investment standpoint, is Rivian right for you? Surely they are on the right path to becoming a dominant player in the electric vehicle space. According to the VectorVest stock forecasting software, the stock is currently rated a Hold. Here are three reasons why…
Three Reasons Rivian Stock is Rated a HOLD Right Now
The VectorVest system simplifies the technical and fundamental analysis by boiling everything you need to know down to three indicators: Relative Value (RV), Relative Safety (RS), and Relative Timing (RT). These indicators sit on a scale of 0.00-2.00 – and the closer to 2.00, the better the stock is performing. By looking at the overall VST rating of a stock, you’ll be given a clear buy, sell, or hold recommendation. And right now, Rivian is underperforming across the board in the VectorVest system:
- Poor Upside Potential: Rivian is currently overvalued and has poor upside potential – with an RV rating of 0.63. This is calculated based on an analysis of projected price appreciation three years out, AAA corporate bond rates, and risk.
- Poor Safety: RS (relative safety) is an indication of risk. And right now, Rivian is a risky stock with an RS of 0.65. This is calculated based on the consistency and predictability of a company’s financial performance, debt-to-equity ratio, and business longevity.
- The Stock’s Price has a Negative Trend: We always encourage investors to buy stocks that are appreciating in value/price. However, Rivian is showing the opposite. Its RT rating of 0.91 suggests a negative trend in price. As this figure gravitates closer to 1.00 and beyond, the trend will have reversed and at that point, it may be worth looking into Rivian as a buy again.
All this considered, Rivian has a poor overall VST rating of 0.76 out of 2.00 – making it a HOLD.
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VectorVest advocates buying safe, undervalued stocks, rising in price. As for Rivian, it has poor upside potential and safety – with a negative price trend. Investors should wait for the trend to turn around before considering buying.
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