Rivian Stock Looks Poised to Rebound

Stocks to buy

Rivian’s (NASDAQ:RIVN) electric vehicles are getting superb reviews, and the company appears to be generating strong buzz. Also importantly, I still believe that Wall Street “has the back of” RIVN stock, and the automaker’s impressive partnership with Amazon (NASDAQ:AMZN) remains intact.

The back of a silver Rivian (RIVN) pick-up truck.

Source: Miro Vrlik Photography / Shutterstock.com

Finally, the downturn of Rivian’s shares in the wake of its recent production update was meaningfully overdone.

And, I think there’s a good chance that Congress will enact new EV tax credits in the first half of next year.

Motor Trend named Rivian’s R1T its 2022 “Truck of the Year.” Not only that, but the publication called the R1T “The most remarkable truck we’ve ever driven.”

Motor Trend praised the truck’s “Engineering Excellence,” citing, among other points, its “clever storage solutions” and the vehicle’s superb handling. Motor Trend also had praise for the EV’s design and its powerful work capabilities.

RIVN Stock and Positive Reviews

Also very impressed with the R1T was another publication, Elektrek, which recently named the EV its “2021 vehicle of the year.”  Calling the R1T a “game changer,” Elektrek’s author, Seth Weintraub, says that the electric vehicle is the best EV he has driven since the 2012 Tesla (NASDAQ:TSLA) Model S. The Rivian R1T has very low drag, a highly efficient design, and “is astonishing on hills and crazy terrain,” Elektrek raved.

When it comes to buzz, Rivian scored much higher on a test that I devised than Lucid.

Specifically, my search in Google’s News tab for “Rivian” on Dec. 21 turned up 15 articles about the automaker in mainstream news outlets, versus just four such articles for Lucid (NASDAQ:LCID) using the same parameters on Nov. 30. As I explained in my article on LCID stock, by “mainstream news,” I’m referring to “popular outlets that specialize in covering general news rather than focusing on a particular niche such as business news or automobiles.”

As I’ve also previously explained, media coverage is one key element of buzz, and it helps spur and accelerate the other key element: social media discussion.

Wall Street and Amazon

In my previous column on RIVN stock, I contended that “Three of the largest banks on Wall Street” were underwriters of Rivian’s IPO and consequently “have a significant incentive to keep the EV maker’s stock price elevated.” Other investors in pre-IPO Rivian were two more huge Street players — Fidelity Investments and  T. Rowe Price (NASDAQ:TROW), along with Amazon, I noted.

Given the backing of all of these big names, I theorized that RIVN stock, whose IPO price was $78, would not drop below $95. During the shares’ recent downturn, their intraday low was $88.40 and their lowest closing price was $89.98. Since those prices are not very much below $95, I continue to believe that the Street will “have the back” of RIVN stock. In other words, I still don’t expect the shares to tumble sharply or come very close to Rivian’s IPO price.

Meanwhile, Rivian’s alliance with the world’s largest e-commerce company remains intact, with the EV maker slated to deliver 10,000 delivery trucks to Amazon by the end of 2022. Of course, the impressive, orders for 100,000 of Rivian’s delivery vans from Amazon is a tremendous, positive asset for Rivian. What’s more, once the automaker starts delivering its EVs to Amazon, RIVN stock should get a big boost.

An Overdone Drop and the Outlook in Congress

RIVN stock tumbled after the automaker reported its third-quarter results on Dec. 16. According to Barron’s, investors were upset by the company’s lower-than-expected production totals. Specifically, Rivian stated that it would manufacture “would make a few hundred units less than their initial 1,200 estimate for 2021.”

But it’s important to keep in mind that vehicles in general and electric vehicles in particular are extremely intricate, highly computerized machines that have to be precisely assembled. As a result, for a start-up to begin making EVs is very difficult. Moreover, as the old saying goes, “it’s more important to do things right than to do them quickly.”

That certainly applies to vehicles, where mistakes can be deadly. So slight delays here and there in production timelines should not be so surprising to anyone.

As far as Congress is concerned, there’s a good chance that the “Build Back Better” bill is done, now that U.S. Sen. Joe Manchin appears to have dug in his heels on the legislation. But I believe, as others are now saying, that Democrats could very well, after the first two months of the year, look to pass parts of the law separately.

After all, the more popular accomplishments they have, the better stories they can tell voters when campaigning for the important 2022 elections.

Manchin has stated that he’s opposed to giving union-made EVs special tax credits, but he has not said that he’s against making the $7,500 tax credits for EVs permanent (they’re now phased out for each automaker’s EVs after the automaker sells certain numbers of them).

Moreover, a number of prominent Republican politicians have expressed support for EVs in recent months. Taken together, this information indicates that there’s an excellent chance of permanent EV tax credits being enacted next year.

The Bottom Line on RIVN Stock

Given the strong reviews for Rivian’s EVs, the buzz they’re generating, and the company’s partnership with Amazon, the firm should be able to sell its EVs as fast as it can make them. Moreover, I doubt whether the shares will drop much below their current levels.

Consequently, I recommend buying the share on their recent weakness.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. 

Larry has conducted research and written articles on U.S. stocks for 14 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Among his highly successful, contrarian picks have been solar stocks, Upstart, Roku, Plug Power, and Snap. You can reach him on StockTwits at @larryramer. Larry began writing columns for InvestorPlace in 2015.

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