Ford (F 0.66%) has been making vehicles for more than a century now. Rivian Automotive (RIVN -2.27%) produced its first vehicle only in late 2021. Yet Rivian stock has gained massive popularity in a short time, because Rivian became the first automaker to bring an electric pickup into the market, beating even legacy automakers like Ford at the game of electric vehicles (EV).
Rivian's stock, though, has fallen dramatically since, even though it's striving to produce electric trucks at scale. Ford, meanwhile, has made big strides in EVs of late, especially with an all-electric version of its uber-popular pickup truck.
Which of the two stocks is a better buy now?
Rivian is on track to hit production goals
Parkev Tatevosian (Rivian): Rivian is one of the fastest-growing companies in the world today. The electric vehicle manufacturer and seller saw its revenue explode from $55 million in 2021 to $1.66 billion in 2022. Backed by Amazon (the e-commerce retailer is an investor in the company and has placed an order for 100,000 electric delivery vans), Rivian is well capitalized, with enough money to ramp up production substantially.
Management is forecasting the production of 50,000 vehicles in 2023, which would be more than double the 24,337 it produced in 2022. Already, Rivian made 9,395 cars in the first quarter, and management noted it's well on its way to hitting the 50,000 target for the year. If the company does hit that goal, it would suggest revenue could double in 2023 from the already torrid growth of 2022.
RIVN Market Cap data by YCharts
It's not often that investors have an opportunity to buy a company achieving such explosive growth. Admittedly, Rivian's stock is not without risk. Rivian's $1.66 billion in revenue in 2022 generated an operating loss of $6.86 billion. There is no telling if or when the company will become profitable.
Growth is always easier if you're willing to lose money. Still, Rivian's stock gives investors a considerable upside in the long run. It boasts a market capitalization of $11.3 billion as of this writing. Meanwhile, Rivian had $12 billion in cash as of Dec. 31. The risk versus reward is worthwhile for investors with a high risk tolerance.
Hard to ignore Ford's plans
Neha Chamaria (Ford): The biggest concern plaguing Ford stock in recent quarters has been disappointing numbers thanks to rising costs. This comes at a time when the markets are already worried about rising interest rates and a potential slowdown, neither of which bodes well for a cyclical company like Ford.
Yet, despite all the challenges, Ford's top line is growing steadily. In the first quarter, for example, Ford's total sales rose nearly 11% year over year. More notably, Ford's management knows the company's weak points and is determined to build a more efficient company.
During the auto giant's fourth-quarter earnings release, CEO Jim Farley admitted the company should have performed better in 2022, and that it will focus on better execution going forward. This focus could hold the key to Ford's growth in the near future.
As management strives to make more money from its traditional vehicles business, it can pump all that cash into its EV business, which is growing at a torrid pace. Ford recently announced it is increasing production of all three of its EVs -- the F-150 Lightning pickup (which is an all-electric version of Ford's best-selling F-150 truck), Mustang Mach-E, and E-Transit vans -- in response to strong demand so far in 2023.
Ford's EV sales jumped 41% year over year in the first quarter. F-150 Lightning is selling out fast, and its annual production run rate is expected to hit 150,000 this year.
Overall, there's a lot to like in Ford, and with the stock losing some ground over the past year or so, it looks like a compelling buy.
Which is the better stock?
Buying Rivian stock is a pure-play bet on EVs. Ford stock, on the other hand, is a bet on a legacy automaker that's expanding into EVs. While the latter sounds like a safer bet, high-risk stocks are also often expected to generate high rewards, especially if they're also growth stocks. Rivian is one such stock.
So while both Rivian and Ford have their growth catalysts in place, the better stock to buy today is the one that suits your risk appetite.
