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Rivian Automotive, Inc. (NASDAQ:RIVN) stock was down over 8% intraday on Friday, over and above the 25.60% loss it incurred in the previous session on back of dismal 2024 production guidance.
Tesla investor and Future Fund co-founder and Managing Partner Gary Black on Thursday defended the company as one that can potentially become the number two electric-vehicle maker, behind the Elon Musk-led company.
Potential To Be Number 2: Black called upon Tesla investors to root for a strong number-two non-ICE player to help the company to accelerate the world’s transition to sustainable energy. The fund manager said Rivian has a high quality product, brand recognition, execution skills, lack of legacy ICE baggage, and competitive conditioning.
Rivian can happily co-exist with Tesla to be that strong number-two player by 2030, he said. Rivian’s brand took the top honors in owner satisfaction, based on Consumer Reports’ survey, with 86% of customers saying they would buy it again, he noted.
Black also said Rivian competes in just pickups and SUVs, the auto industry's two most profitable segments.
General Motors Corp. (NYSE:GM), Ford Motor Co. (NYSE:F), Volkswagen AG (OTC:VWAGY) and BYD Co. Ltd. (OTC:BYDDY) do not have it in them to be that credible number two, the fund manager added.
See Also: Best Electric Vehicle Stocks
Cash Position: The Irvine, California-based EV maker will likely to be gross-margin positive by the fourth quarter, Black said, adding that the company’s cash bleed will drop significantly exiting 2024. He also shrugged off concerns regarding capital adequacy.
The Irvine, California-based company has never had any trouble raising capital, the fund manager said. He also noted that the company had $9.4 billion in cash and marketable securities, exiting the fourth quarter.
M&A Probability High: Black also flagged the probability of Rivian’s electric delivery van customer Amazon, Inc. (NASDAQ:AMZN) buying Rivian. Even at a 50% premium, Amazon can buy Rivian out for a “rounding error,” he said. He noted that Rivian’s enterprise value would be under $10 billion compared to Amazon’s $1.8 trillion market cap. At the end of 2023, the e-commerce giant had cash and short-term investments of $87 billion, he added.
Upcoming Catalyst: Rivian shares currently traded at 1.5 times 2023 revenue compared to 6.2 times for Tesla, Black said. He also sees the upcoming R2 launch event on March 7 to be a key catalyst.
The R2 second-gen platform will put Rivian into the $45,000 to $50,000 segments, he added.
Black is among the analysts who have been calling for Tesla to expedite the launch of the Model 2 next-gen platform EVs, which will likely have a sub-$30,000 price point.
Future Fund Active ETF (NYSE:FFND), the actively-managed exchange-traded fund floated by Black’s fund, owns 3,700 Tesla shares valued at $730,417, and 20,852 Rivian shares valued at $238,755.
At last check, shares of Rivian were down 7.9% to $10.54, according to Benzinga Pro data.
Check out more of Benzinga’s Future Of Mobility coverage by following this link.
Related Link: Tesla CEO Elon Musk Says Rivian Exec Team Needs ‘To Live In The Factory Or They Will Die’
Photo: Shutterstock
