I’m currently searching for growth stocks on sale in the US bear market sell-off. With that in mind, let’s look at how much I’d have made if I’d invested in Rivian (NASDAQ: RIVN) stock 12 months ago and explore my take on the business today.
Just over a year ago, shares in the electric vehicle (EV) maker surged in a trading frenzy that followed its stock market debut. Rather unluckily perhaps, Rivian’s IPO came less than a fortnight before the Nasdaq reached an all-time high. Since then, the index has been in a consistent downtrend and the company’s shares have led the charge, plummeting in 2022.
So, if I’d invested in Rivian stock a year ago, what would I have now?
One-year returns
Today, Rivian’s market cap is around $23bn. The stock currently trades for $25.61.
Exactly one year ago, the shares price was $118.90, having come down from $172 in the post-IPO excitement. This means on a 12-month basis, the stock has declined over 78% to today’s level.
With £1,000, I could have bough $1,325 a year ago. If I’d invested this in Rivian shares, my holding would have shrunk in value to to $285.40 today, with no dividends to soften the blow.
Converted back into sterling, this leaves me with an investment worth £225.49 at current exchange rates.
Risks and opportunities
Rivian has experienced mixed fortunes in its collaborations with other businesses. It was backed as a start-up by Amazon, which still owns over 17% of the company’s shares according to the latest estimates. The e-commerce titan has agreed to purchase 100,000 electric delivery vans by 2030.
However, recent expansion plans collapsed as discussions with German automotive giant Mercedes-Benz for a new European factory stalled. This comes only a few months after Rivian’s talks with Ford to produce a vehicle together proved fruitless. Ford subsequently sold 8m Rivian shares in mid-2022, but still remains a major shareholder.
Our core focus remains on ramping production.
Rivian Q3 2022 shareholder letter
Rivian doesn’t expect to become profitable anytime soon, but it continues to pursue ambitious manufacturing plans. Indeed, the company recently confirmed a $1.7bn net loss for Q3. Gross margins were driven down by labour, depreciation, and overhead costs.
I expect inflationary pressures will continue to adversely impact the business for the near future. On balance, I fear the stock may have further to fall.
Nonetheless, it’s hard for me to ignore the macroeconomic and regulatory tailwinds in Rivian’s favour. The Biden administration has signed a raft of legislation aimed at achieving the federal government’s goal of 50% EV sale shares in the US by 2030.
This is a useful reminder that the company operates in an industry with huge long-term potential, despite the challenges it faces.
Would I buy Rivian stock?
Rivian looks tempting following its remarkable drop, but I’m glad I didn’t get involved when the share price was well into treble digits.
After multiple failed discussions with big industry players, the company has yet to show me enough concrete evidence that it can capture significant market share from competitors like Tesla, which also trades near its 52-week low.
I think there are better growth stock opportunities elsewhere. I wouldn’t buy Rivian stock today.
