Preferred Electric Vehicle (EV) Shares to Acquire Prior to November 30th
Preferred Electric Vehicle (EV) Shares to Acquire Prior to November 30th
Electric automobile (EA) stocks were once market favorites. In 2021, numerous significant EA manufacturers went public. The valuations back then were jaw-dropping.
However, a lot has transformed since 2021. Valuations have plummeted back to reality. If you're looking to infuse substantial growth potential into your investment portfolio, now appears to be the opportune moment. For investors aiming to amplify their potential gains, there's one EA stock that stands out.
3 reasons I'm smitten with this EA stock
Many traditional EA buyers are oblivious to Rivian (RIVN -4.17%). In comparison to a major EA manufacturer like Tesla, Rivian has a considerable journey ahead. Even after an impressive growth spurt post its IPO in 2021, sales have just surpassed the $5 billion mark — less than 10% of Tesla's annual revenues.
Despite remaining unknown to many, the company has managed to evoke a strong sense of loyalty among its existing customers. This is the first aspect that I admire about Rivian: Those who own its vehicles are smitten with the company. Despite Consumer Reports criticizing Rivian's two existing models, a subsequent survey of actual owners revealed that 86% of them would opt for another Rivian for their next vehicle purchase. No other car manufacturer achieved the 80% mark. Note that the survey included both EA and conventional automakers. Rivian may not yet be a household name, but its customers are deeply fond of its offerings.
This leads me to the second reason why I adore Rivian: It's poised to expand on this reputation for excellence with three new vehicles. Earlier this year, management disclosed three mass market models: The R2, R3, and R3X. All are set to debut with starting prices below $50,000. Reaching this price point could catapult Rivian into becoming a common household name. Currently, its two existing models — the R1T and R1S — both sell for around $100,000, limiting Rivian's potential growth relative to Tesla. However, as Tesla demonstrated with its mass market models — the Model Y and Model 3 — this category of EAs is what can skyrocket sales.
The final reason to adore Rivian at the moment is that shares are historically extremely affordable. The stock trades at just 2.4 times sales — a substantial discount to Tesla's current valuation. There are some good reasons for this that we'll delve into in the following section. Yet, it's undeniably accurate that if you're considering purchasing Rivian stock, now appears to be the best time to do so from a valuation perspective since its IPO in 2021.
Should you buy Rivian before Nov. 30?
There are several reasons why Rivian's stock price is struggling. First, it reported a negative sales growth rate last quarter — its first negative growth rate since going public. Tesla, meanwhile, grew its sales last quarter by around 6%. This weakness reflects overall weakness in EA sales across the U.S., but also Rivian's lack of mass market options. However, this gap should be filled with the launches of the R2, R3, and R3X. Yet, these models aren't expected to hit the roads until 2026 at the earliest. Meanwhile, Rivian continues to lose tens of thousands of dollars on every car it sells. The clock is ticking, and its cheap multiple reflects the market's skepticism.
However, there's still a reason to buy Rivian stock before the end of the month. The company expects to achieve gross profitability by the next quarter. The current slump in the EA market could be a temporary phenomenon. And if Rivian's new mass market models are able to enter the market, there's a good chance we'll see revenues double or even triple over time. It's a long-term investment thesis, but the current valuation discount is available right now.
If you've been waiting to initiate a position in high-growth EA stocks, don't delay. Just be prepared to add more to your position if shares show further signs of weakness.
Given the current market situation, if you're interested in investing in electric vehicle (EV) stocks with substantial growth potential, Rivian might be an attractive option. Despite facing challenges such as negative sales growth and ongoing losses, the company has a strong loyal customer base and plans to introduce three mass market models with starting prices below $50,000. Moreover, Rivian's shares are currently trading at a substantial discount compared to Tesla's valuation, making now an opportunity for potential investment.
In the context of the finance and money domains, the affordable valuation of Rivian stock signifies a chance for investors to invest in a promising EV manufacturer at a potentially lower risk due to the discounted price compared to its market peers.