Rivian Is The Modern Day Pets.com

Sharing is Caring!

by OtherwiseSail3

Rvian has obtained legendary status among the Pets.com of the world with its ability to command a market cap of 130B+ on virtually 0 sales. Even banking Rivian will be able to deliver on all of its pre-orders (which are never guaranteed) there are so many obstacles and risks to their success; they should not command a massive multiple.

Currently their biggest competitor Tesla is trading at 25x revenue and has traded from 15-30x revenue over the last 1-2 years. Today Rivian is trading at 150–200–even 250x Price to Revenue. While comparing Tesla ( a well known, huge company with multiple production plants, battery tech, great engineers, market dominance, Elon, a huge following, massive assets, full AI self driving and a proven production / delivery method) is like comparing apples to apes, let do it. Lets use Price to Revenue as the model and compare Rivian revenue to Tesla revenue.

To be fair we should take the anticipated cars being made this year (Rivian says they hope 1k)* average cost of each car (67.5k base + extras = ~75k lets say) = 75mm in sales. To make it a better comparison lets make this a yearly number. Also lets make a great case for Rivian with great production efficiently, no problems, continued refinement, and growth from current cars per day(CPD) (current pace is ~3 CPD or ~320 by EOY but they hope to deliver 1k cars by EOY 2021 which is goal of 1k/108 days since 9/14/21 production start = CPD of 9.25) and lets double it next year. That would give us 9.25 x 2 x 365 x 75k = 506mm per year in revenue and make today’s valuation (at 131B) 258x FY 2022 revenue only after assuming a myriad of extremely positive assumptions.

For fun lets triple 9.25 and even then at 760mm in revenue that is 172x FY2022 revenue. Said another way, in order for Rivian to have the same Price/Revenue as Tesla’s average of 22 they would have to produce 5.95Billion in revenue or 79.4k cars per year or ~218 CPD aka 72x their current CPD rate or 23.5x their 2021 target CPD rate. So lets reverse engineer that to find a reasonable stock price — FY2022 best case sales 760m*30 (highest Tesla P/R)=22.8B or ~21$ per share which is still ~8x what Amazon paid about a year ago. Anyone else smell this shitty bubble and going to short this?

 

Disclaimer: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence or consult your financial professional before making any investment decision.

1,056 views

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.