Maybe you know the name. Maybe you know the wild ride that it's been on since its initial public offering in November 2021. But there are, undoubtedly, plenty of things that you probably don't know about one of the better-known emerging electric vehicle (EV) names: Rivian (RIVN 2.84%).
While the nascent EV manufacturer has hit some bumps in the road, prospective investors remain focused on the company's potential -- not to mention those who have already parked the stock in their portfolios. Whether you fall into either one of these camps or you're content to watch this stock from afar, well-informed investors are, often, successful investors.
Here are five things to add to your knowledge base about Rivian.
1. Some Georgians aren't charged up about the company's presence
In addition to its manufacturing facility in Illinois, Rivian is progressing with the development of a new plant east of Atlanta, Georgia, where the company plans on assembling its R2 vehicles. When Rivian achieves full-scale production at the facility in the Peach State, it expects to achieve annual production capacity of 600,000 vehicles between the two plants. Clearly, the successful development of the second facility figures prominently in the company's growth trajectory.
But not everyone is happy about the prospects of Rivian building a presence in Georgia. Local residents have voiced opposition to the manufacturing plant's development and brought their complaint -- claiming the company's receiving of tax credits violates the state's constitution -- regarding the facility before the courts. If the court sides with Rivian's critics, it could cost the company the $700 million in tax credits it received when it agreed to locate its facility in the state. For Rivian's shareholders, this story is undoubtedly something to follow closely.
2. Trouble's also looming in California and Illinois
It's not only Georgia where Rivian is facing challenges. It has also encountered conflict regarding the company's culture at its California headquarters. Last November, Laura Schwab, who had served at the time as the company's Vice President for Sales and Marketing, sued Rivian, alleging that a "toxic bro culture" existed among upper management and that she suffered from gender discrimination. There have been no recent updates on how the litigation is proceeding.
Rivian has also faced bumps in the road at its manufacturing facility in Illinois where, earlier this month, a fire broke out and interrupted operations. It's not the first time something like this has happened. There have apparently been several other incidents like this at the same facility.
3. The risk seems too great for a few familiar investing faces
There's no question that Rivian draws lots of attention from investors. Sometimes, Rivian's name appears among the meme stock crowd, such as this week when it was the most popular stock on Reddit's WallStreetBets subreddit, What Are Your Moves Tomorrow.
Despite its popularity among those on Main Street, some of the most recognizable investors haven't decided to power their portfolios with the stock. It's unsurprising that Warren Buffett hasn't picked up shares, considering the company doesn't fit much of the Oracle of Omaha's criteria for investment. More surprising, though, is that Cathie Wood hasn't decided to hitch a ride with the EV maker just yet. While many EV names -- Tesla, Nio, and XPeng, to name a few -- are found among the stocks in the Ark Invest ETFs, Rivian hasn't earned a place.
Another high-profile name, Tiger Global, has turned its back on Rivian. At the end of the first quarter, Tiger Global Management, led by billionaire Chase Coleman, exited its position -- totaling 750,000 shares -- in Rivian, though it maintained EV exposure.
4. Shares sorta kinda look cheap
Long gone are the days after Rivian's IPO, when shares accelerated sharply upward. About one week after it first debuted on the public markets at $78, shares of Rivian had skyrocketed to $172. Over the last seven months, however, the stock has slid precipitously from its previous lofty height. Nowadays, shares are trading at about $30.
The 83% drop from its all-time high that the stock has suffered certainly makes it look more attractive from a price tag perspective. Since the company doesn't generate earnings or cash flow, it's impossible to use traditional valuation metrics; however, we can assess the stock in regard to sales. Currently, the stock trades at 175 times trailing sales, which is understandable considering the high growth expectations that are included in the share price. But take into account another new EV name, Lucid, and Rivian's stock seems more reasonable; shares of Lucid are changing hands today at around 391 times sales.
5. Despite the speed bumps, insiders have confidence
There's no denying it has been a rocky road for Rivian and its shareholders lately. Nonetheless, management remains committed to the belief that the stock will rise again -- so much so that executives have been increasing their positions in the company. On May 26, for example, Jay Flatley, Rivian's director, bought 40,000 shares in a transaction valued at $1.17 million. About two weeks prior, Robert Scaringe, Rivian's CEO, dipped into his pockets to the tune of $1.06 million and bought 41,000 shares.
For a variety of reasons, insiders are motivated to exit their positions in the companies they lead. However, it's pretty reasonable to presume that insiders buying stock is due to their belief that they see good things ahead for the company -- and the related stocks.
The final lap
Like many young companies, Rivian is finding that there's a pothole or two on the road to success. It's important to recognize, though, that true as this may be, it doesn't mean that every company will be able to surpass the pitfalls that plague it early on. Therefore, it's important for prospective and current investors to be well aware of the company's situation -- both the good and the bad.
