Rivian Automotive, Inc. RIVN stock was down over 8% intraday on Friday, above the 25.60% loss from the previous session due to gloomy 2024 production guidance.
Tesla investor and Future Fund co-founder and Managing Partner Gary Black stood by Rivian, foreseeing it as a potential frontrunner in the EV market, second only to the Elon Musk-led giant.
The Underdog Rising: Black beckoned Tesla investors to support a strong runner-up in the non-ICE realm to hasten the globe’s transition to sustainable energy. Rivian, he contends, possesses a top-tier product, strong brand recognition, stellar execution capabilities, a lack of ICE heritage, and intense competitiveness.
Black envisions Rivian comfortably co-existing with Tesla as a formidable runner-up by 2030. The automaker’s brand clinched top honors in customer satisfaction, with 86% of owners expressing willingness to make a repeat purchase, as per Consumer Reports.
Additionally, Rivian, solely focusing on pickups and SUVs, involves itself in the auto industry’s most lucrative segments.
General Motors Corp. GM, Ford Motor Co. F, Volkswagen AG VWAGY, and BYD Co. Ltd. BYDDY lack the potential to claim that coveted second position, according to Black.
Cash Resilience: Black predicts the Irvine-based EV maker will turn gross-margin positive by Q4 and significantly curtail its cash burn by the end of 2024. Concerns about capital sufficiency were waved off by Black, who highlighted Rivian’s consistent success in raising funds. As of Q4, the company boasted $9.4 billion in cash and marketable securities.
The lingering anticipation of a buyout from key customer Amazon intrigued Black. He hinted at high odds of Amazon acquiring Rivian, emphasizing that even with a 50% premium, the acquisition would be a trifle for the e-commerce titan, given Rivian’s sub-$10 billion enterprise value vis-a-vis Amazon’s $1.8 trillion market cap.
Key Catalyst Ahead: Rivian’s current valuation at 1.5 times 2023 revenue in comparison to Tesla’s 6.2 times piqued Black’s interest. He sees the upcoming R2 platform launch event on March 7 as a pivotal driver of Rivian’s future success. The R2 platform would position Rivian in the $45,000 to $50,000 segment, broadening its market reach.
Black, a vocal proponent for Tesla’s swift rollout of the Model 2 platform for sub-$30,000 EVs, also lauds Rivian’s potential in the EV landscape.
Future Fund Active ETF FFND, managed by Black’s fund, holds 3,700 Tesla shares valued at $730,417 and 20,852 Rivian shares valued at $238,755.
As of the latest data, Rivian shares were down 7.9% to $10.54, per Benzinga Pro.
Explore more of Benzinga’s Future Of Mobility coverage by clicking here.
Related Link: Tesla CEO Elon Musk Says Rivian Exec Team Needs ‘To Live In The Factory Or They Will Die’
Photo: Shutterstock
