Based in Irvine, California, Rivian (RIVN) is an electric vehicle (EV) manufacturer. I am bullish on the stock.
Rivian stock surged after its 2021 initial public offering (IPO), but the rally wasn’t destined to last long. After topping out at $179.47, the shares have lost nearly two-thirds of their value.
It’s a painful lesson for folks who bought into the hype and jumped on the Rivian bandwagon at the wrong time. However, there may be a prime buying opportunity now that the shares are trading at a steep discount.
If you choose to take a stake in Rivian, at least you’ll know that you’re in good company. In fact, a well-known e-commerce giant has amassed a surprisingly large hoard of Rivian shares. Is this enough to validate Rivian’s business?
Marking Milestones
Don’t misunderstand – the idea isn’t to buy shares of a stock just because a big company has them. It’s important for informed investors to conduct their own due diligence and base their decisions on the available data.
Fortunately, the data looks pretty good for Rivian. For example, Rivian Automotive produced 1,015 vehicles by the end of last year. Not only that, but the company delivered 920 vehicles by 2021’s end.
Sure, there are bigger automakers with much higher annual production and delivery figures than that. Still, Rivian appears to be making significant progress for an EV-market start-up.
Looking ahead, Rivian has more milestones to achieve in the near term. For one thing, the company plans to expand the annual production capacity of its Normal, Illinois factory from 150,000 to 200,000 vehicles.
Along with that, Rivian is building a second domestic manufacturing facility near Atlanta, Georgia. The targeted annual production capacity for that plant is 400,000 vehicles.
An Amazon-Sized Investment
It’s reasonable to infer that Rivian wouldn’t target those vehicle production numbers unless the company planned to sell large numbers of EVs. So, 2022 could be a banner year for this small but growing automaker.
Not that Rivian’s plans will come to pass without some bumps in the road. There will always be problems and obstacles along the way. For instance, a Rivian vehicle reportedly caught fire earlier this month. Thank goodness, nobody was injured in that incident.
Despite the company’s current and potential future issues, at least one mega-sized business is evidently making a behemoth bet on Rivian.
In case you haven’t figured it out by now, Rivian’s big-time investor is none other than e-commerce leviathan Amazon (AMZN). Truly, it’s hard to think of any investor with more clout than Amazon.
We’re not talking about a small position here, either. Reportedly, Amazon beneficially holds an 18.1% stake in Rivian.
If you’re not sitting down, then you probably ought to be because the numbers are mind-blowing. Believe it or not, Amazon beneficially owns 162,086,884 shares of Rivian stock.
It’s even been said that the e-commerce company’s stake in Rivian “rescued” Amazon during its recent earnings release.
You don’t need to buy Rivian stock to “rescue” your portfolio, but a less-than-Amazon-sized stake might be worth considering.
Wall Street’s Take
Turning to Wall Street, RIVN stock is a Moderate Buy based on 11 Buys and four Holds assigned in the past three months. The average Rivian price target is $133.21, implying 106.2% upside potential.
The Takeaway
Obviously, a number of Wall Street analysts envision higher prices for Rivian stock. Amazon is, without a doubt, also bullish on Rivian.
Otherwise, why would Amazon hold so many shares of Rivian stock? There are many reasons to sell, but typically only one reason to buy, according to old market wisdom.
That reason is: the stock price is expected to go up at some point. Sooner or later, Rivian’s production ramp-up should enhance the value of the shares, thereby enriching Amazon and any retail investors on the long side of the trade.
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