Electric vehicle startup Rivian Automotive, Inc. (NASDAQ:RIVN) has experienced a remarkable surge in its stock price since late June, nearly doubling in value since June 26.
Future Fund Managing Director Gary Black has raised the possibility of Rivian becoming an attractive acquisition target in the EV market.
Black believes an established automotive manufacturer will acquire Rivian and utilize it as its EV platform. Unlike Lucid Group, Inc. (NASDAQ:LCID), which focuses solely on luxury sedans and addresses only 6% of the total addressable market, Rivian has a broader reach in the two fastest-growing segments: crossover utility vehicles and pickups, which together account for approximately 50% of the total addressable market.
Black highlighted the potential for Rivian to enter the $40,000 to $60,000 price segment once it achieves scale with its R1T pickup truck and R1S SUV. This segment qualifies for the IRS tax credit of $3,750-$7,500, providing additional incentives for potential buyers, he said.
Rivian is currently competing with Ford in the EV truck segment against the F-150 Lightning for the R1T as they are they only trucks in the electric market. The R1S is currently competing against the VinFast VF 9 and the Tesla Model X as they are the only three-row SUVs in the EV market.
The incoming Chevrolet Silverado EV, Tesla Cybertruck, and the Ram 1500 REV will be competing with Rivian’s R1T once they hit the market.
Rivian’s commercial vans have been order by Amazon and are currently on the road as the E-commerce giant had invested in the EV automaker along with Ford.
In terms of valuation, Black considers Rivian to be undervalued compared to its competitors. While Rivian currently trades at a two-times multiple of enterprise value/2024 revenue, Lucid trades at 6.3 times and Tesla, Inc. (NASDAQ:TSLA) at 6.7 times.
Black suggested adjusting Rivian’s enterprise value by deducting its $11 billion net cash from the market cap, resulting in an enterprise value of $15 billion. Considering the projected vehicle sales for this year, Black believes Rivian’s enterprise value should be six times that of Lucid’s $16 billion.
Enterprise value per vehicle sold for 2023 would be $297,000 for Rivian, $462,000 for Tesla and $2 million for Lucid, the fund manager said.
Produced in association with Benzinga
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