Don't just focus on Tesla; Rivian's revenue soared 82% in the first quarter! Can it explode as the best investment choice for trams?

Recently, the electric vehicle industry has fallen out of favor with investors due to falling demand for electric vehicles and concerns that Fiske might file for bankruptcy.

A number of electric vehicle manufacturers such as Rivian Automotive (NASDAQ: RIVN), Lucid Group (LCID), and Tesla (TSLA) have shown signs of slowing growth, which has led to significant loss of value over the past year. Rivian's recent first-quarter earnings report also fell short of Wall Street's expectations.

Despite this, Rivian is sticking to its target of delivering 57,000 electric vehicles for the 2024 fiscal year, and now the EV maker's revenue momentum and unit economy are improving.

Although it may take longer than expected for this electric vehicle company to achieve profits, I think the risk-to-benefit ratio still tends to be positive for long-term investors!

In February of this year, I strongly recommended buying Rivian shares. Since then, the company announced 17,541 electric vehicles produced in the fourth quarter, a record high: it will soon become a single-price stock, so what do we do now?

Despite the challenges facing the electric vehicle industry in a market environment of sluggish demand and continued inflation, I still think Rivian is moving in the right direction, especially given that it confirms delivery forecasts for the 2024 fiscal year.

In my opinion, Rivian's valuation is very attractive, and its share price is currently in single digits, which makes it particularly prominent. If you are considering buying on dips, you need to be more optimistic about Rivian's future development, use BiyaPay to search its code, monitor market trends at any time, and trade online in real time. You can also deposit digital currency (USDT) to BiyaPay, then withdraw fiat money to invest in other securities.

Despite strong R1S and R1T production momentum, Rivian failed to meet earnings bottom line expectations in the first quarter. Rivian reported an adjusted loss of $1.24 per share and reached $1.2 billion in revenue.

However, thanks to continued revenue growth, the EV maker's total revenue surpassed market expectations by $37 million.

Rivian's financial report for the first quarter of 2024 shows that while the company's revenue momentum remains strong (mainly due to increased production), the losses of electric vehicle manufacturers are still huge. Revenue for the first quarter reached $1.2 billion, up 82% year over year.

Operating losses for the first quarter were reduced to $1.48 billion from $1.58 billion in the previous quarter. More importantly, due to increased factory output, the company's economic performance per unit has improved: Rivian's loss per vehicle was reduced from 43.4 thousand dollars in the previous quarter to 38.8 thousand dollars.

As losses gradually decrease, particularly per sales unit, I think Rivian is on the right path to improving its financial position overall, especially considering that the company has confirmed the delivery target of 57,000 electric vehicles for the 2024 fiscal year.

While Rivian may take a few more years to become profitable, the electric vehicle company is well-capitalized and has one of the best balance sheets in the electric vehicle industry.

As of the end of the March quarter, Rivian's total liquidity (including short-term investments) was $7.9 billion, down 16% from the previous quarter. Rivian spent approximately $1.8 billion on operations and capital expenses in the first quarter, so the company's current funding situation is sufficient to keep it running for at least another year.

I expect Rivian will probably issue more advanced convertible bonds in the second half of this year. Currently, Rivian has recorded long-term debt of $4.4 billion on its balance sheet, which shows that the electric car maker is fully capable of increasing the financial burden to extend the use of its funds.

I think Rivian's revenue continues to grow rapidly, and it still represents extremely high value in the broad-market electric vehicle industry. The electric car maker's annual revenue is expected to continue to grow.

Rivian's market-sales ratio is the lowest in the US large-market electric vehicle industry. In contrast, Lucid delivers fewer electric vehicles and far less than Rivian's annual revenue, so Rivian is more cost-effective. Obviously, Tesla's situation is different, as the company produces and delivers millions of cars worldwide and has achieved good profitability in terms of profitability and free cash flow.

Rivian's current share price is just 1.4 times its expected revenue for 2025, which is 83% lower than the average price-sales ratio of 8.2 times over the past three years.

In my recent analysis of Rivian, I predicted that Rivian's share price could rise back to $22 per share, provided the company can reduce losses, improve unit economic efficiency, and maintain a good revenue growth momentum (this estimate is based on an average price-earnings ratio of 2.4 times the industry).

I still think this is a very reasonable estimate, considering Rivian has confirmed its production target of 57,000 vehicles for the 2024 fiscal year.

In my opinion, Rivian's biggest risk is declining demand for electric vehicles, which could cause the company to fail to meet its anticipated revenue potential. This could significantly increase the pressure on company valuations and could have a negative impact on Rivian's gross profit per unit trend.

If the trend of the company's gross profit per unit reverses, or if the electric vehicle manufacturer lowers its delivery target of 57,000 vehicles later this year, these factors could change my opinion on Rivian.

Rivian presented a fairly strong performance report for its first fiscal quarter, showing revenue surging 82% year over year, while losses in gross profit and operating income per unit also declined.

In my opinion, the significant increase in revenue and solid expectations for the 2024 fiscal year all provide a solid foundation for why it is bullish. Additionally, I think Rivian's current low market capitalization (its share price is in single digits) is an important reason to invest in this electric vehicle maker now.

From a valuation perspective, I believe Rivian is still the best choice for investors in the US large-market electric vehicle market.

Source: Seeking Alpha

Editor: BiyaPay Finance