Rivian’s Surge In Stock Price Makes It An Attractive Acquisition Target In EV Market

People walk by electric truckmaker Rivian's newly opened storefront in the Meatpacking District of Manhattan on June 23, 2023, in New York City. The 5,000-square-foot location, Rivian’s first on the East Coast, displays its R1T and R1S electric vehicles and offers merchandise, test drives and a lounge and activity space for children. The Manhattan showroom is a temporary location until Rivian opens its permanent New York location in Brooklyn’s trendy Williamsburg neighborhood. (Spencer Platt/Getty Images)

Electric vehicle startup Rivian Automotive, Inc. (NASDAQ:RIVN) has experienced a remarkable surge in its stock price since late June, nearly doubling in value since June 26.

People look at Rivian electric trucks at the automaker’s newly opened storefront in the Meatpacking District of Manhattan on June 23, 2023, in New York City. The R1S is one of two passenger vehicles sold by Rivian. (Spencer Platt/Getty Images) 

Future Fund Managing Director Gary Black has raised the possibility of Rivian becoming an attractive acquisition target in the EV market. 

Black believes an established automotive manufacturer will acquire Rivian and utilize it as its EV platform. Unlike Lucid Group, Inc. (NASDAQ:LCID), which focuses solely on luxury sedans and addresses only 6% of the total addressable market, Rivian has a broader reach in the two fastest-growing segments: crossover utility vehicles and pickups, which together account for approximately 50% of the total addressable market.

People look at Rivian electric trucks at the automaker’s newly opened storefront in the Meatpacking District of Manhattan on June 23, 2023, in New York City. The R1T is one of two passenger vehicles sold by Rivian. (Spencer Platt/Getty Images) 

Black highlighted the potential for Rivian to enter the $40,000 to $60,000 price segment once it achieves scale with its R1T pickup truck and R1S SUV. This segment qualifies for the IRS tax credit of $3,750-$7,500, providing additional incentives for potential buyers, he said.

Rivian is currently competing with Ford in the EV truck segment against the F-150 Lightning for the R1T as they are they only trucks in the electric market. The R1S is currently competing against the VinFast VF 9 and the Tesla Model X as they are the only three-row SUVs in the EV market.

The incoming Chevrolet Silverado EV, Tesla Cybertruck, and the Ram 1500 REV will be competing with Rivian’s R1T once they hit the market.

Rivian’s commercial vans have been order by Amazon and are currently on the road as the E-commerce giant had invested in the EV automaker along with Ford.

In terms of valuation, Black considers Rivian to be undervalued compared to its competitors. While Rivian currently trades at a two-times multiple of enterprise value/2024 revenue, Lucid trades at 6.3 times and Tesla, Inc. (NASDAQ:TSLA) at 6.7 times. 

Black suggested adjusting Rivian’s enterprise value by deducting its $11 billion net cash from the market cap, resulting in an enterprise value of $15 billion. Considering the projected vehicle sales for this year, Black believes Rivian’s enterprise value should be six times that of Lucid’s $16 billion.

Enterprise value per vehicle sold for 2023 would be $297,000 for Rivian, $462,000 for Tesla and $2 million for Lucid, the fund manager said.

Produced in association with Benzinga

Edited by Alberto Arellano and Joseph Hammond