The Rivian stock price prediction for 2025 is that the company will have a steep drop. The company has high profile investors and is undergoing production, but if you are looking for an accurate prediction, you should consider some of the following factors:
Rivian’s production is going well
The first quarter of Rivian’s production of its R1T pickup truck has been relatively smooth. The company has been ramping up production to meet the demand for its $70,000 EV trucks. However, that ramp up has been slower than expected. The company has produced just 652 vehicles since September and is a few hundred short of its goal by the end of 2021. Rivian is also focusing on producing the R1S, a smaller version of the R1. The company recently produced its first two saleable R1S vehicles.
The company’s second-quarter production figures are encouraging, but it remains unclear whether it can sustain its production momentum in the second half of the year. Rivian has a high price-to-earnings ratio, and investors may not be happy with its current risk profile. Still, investors should pay attention to the company’s Q2’22 results. Rivian’s production ramp is on track to meet its FY 2022 factory output guidance, but it must prove its production momentum in the second half of the year.
The company has lowered its production guidance from 40,000 vehicles per year to 25,000 per year in 2022. The company has faced supply chain issues as well as pandemic effects in recent years. The company’s production ramp-up in the first quarter was smooth, despite its production constraints. However, the company is spending more than its earnings. With only six months to go before the end of the third quarter, Rivian may not reach its goal of 1,200 vehicles by 2021.
Rivian has a large order from Amazon
Amazon’s large order for electric delivery vans has given Rivian a psychological boost. Amazon will use the Rivian electric trucks in at least 10 cities by 2024. Rivian plans to deliver the first vans to the Amazon fleet by the end of this year. The company has long planned to sell 100 percent of its vehicles to fleet customers, including other companies. In other words, the company’s contract with Amazon might have a little wiggle room.
The market for electric cars is massive. In 2020, there were only 10 million electric cars on the road. By 2030, that number could grow to 145 million. Rivian is well positioned to profit from this shift. It already has an order from Amazon to deliver 100,000 electric delivery vans. It might try to secure similar agreements with other logistics companies. However, it is still unclear whether it will continue to build its vehicles in-house or outsource the manufacturing process to a third party.
Rivian has filed a draft prospectus for its IPO on Oct. 1. The company plans to list on the Nasdaq under the ticker “RIVN.” In the document, Rivian outlines how its relationship with Amazon will work. The company has exclusive rights to Amazon’s electric vehicles for four years, according to the filing. It also says that Amazon has an order for 100,000 vehicles by 2030. Despite the large order from Amazon, Rivian expects to put 10,000 on the road by next year.
Rivian has high-profile investor backing
With a $2.65 billion IPO, Rivian could raise $12 billion in a single round, a figure that would eclipse Uber’s $8 billion IPO earlier this year. It plans to use the money to ramp up production of its vehicles and expand its distribution network. Rivian has high-profile investor backing, including T. Rowe Price Associates, Amazon’s Climate Pledge Fund, and D1 Capital Partners.
Since the IPO, shares of Rivian Automotive Inc. have surged 37%, valuing the company at $97 billion. The company’s shares have already delivered more than 150 electric pickup trucks to customers, and it is backed by Amazon and Ford. Rivian’s IPO has triggered comparisons with the success of rival company Tesla Inc., which went public in 2010 and announced losses of $1 billion. Tesla’s initial market cap was only $2 billion, and it would not reach that figure until 2020.
Despite high-profile investor backing, Rivian shares remain overvalued. Rivian’s free cash flow is negative until FY 2024, and the company is ramping up production. Rivian will remain free-cash-flow negative until FY 2024, meaning that the shares have room to fall further. And while the company has a compelling brand and a first vehicle, investors are often wary of investing in EV stocks.