Financial traders have been buzzing about electric vehicle (EV) manufacturer Rivian Automotive (NASDAQ:RIVN) lately. RIVN stock ran fast in June and July, so is it a good time to start a share position now? I’d recommend caution and patience, even if you expect Rivian to thrive in the long run.
Not long ago, Louis Navellier expressed concerns about Rivian Automotive’s lack of profitability. This is an important consideration, especially if the Rivian Automotive share price is accelerating too quickly.
Meanwhile, I’ve maintained a moderately optimistic view of RIVN stock. Today, I’m revealing my target buy price for the stock. After all, adopting a “buy low, sell high” strategy is (in my humble opinion) usually better than chasing after high prices.
Rivian’s Customers Are Waiting for Deliveries
In a recent interview, Rivian Automotive CEO R. J. Scaringe compared manufacturing internal combustion engine (ICE) vehicles to “building a horse barn in 1910.” Clearly, Scaringe is confident about the future of EVs.
He’s also quite confident about his company’s ability to produce and deliver its vehicles. I’ll acknowledge that Rivian Automotive appears to be on track to meet its 2023 production guidance of 50,000 vehicles. However, this doesn’t necessarily mean Rivian will actually sell a large portion of those 50,000 EVs this year.
In this challenging economic landscape, and in the wake of Tesla’s (NASDAQ:TSLA) vehicle price cuts, Rivian Automotive may have a tough time selling its pricey R1T electric pickup trucks. Scaringe identifies the R1T as having a price point above $70,000.
The company also offers a performance-focused line of SUVs known as the R1S. Yet, the wait times for the R1S vehicles are reportedly quite long.
If you pre-ordered a Performance Dual-Motor R1S by March 1, 2022, you may finally receive your vehicle sometime this year. And Rivian’s much-touted upcoming R2 SUV, which is supposed to be comparatively affordable, reportedly won’t be released until 2026.
Tesla’s Cybertruck Threatens Rivian Automotive and RIVN Stock
Rivian Automotive might intend to deliver a lot of R1T and R1S models, but that’s easier said than done. Scaringe’s confidence is encouraging, but Rivian still has to face fierce competition in an increasingly crowded EV field.
Perhaps Rivian Automotive’s biggest threat is Tesla, which has a futuristic EV known as the Cybertruck. It’s already in production and getting close to mass delivery.
Believe it or not, over 1.9 million reservations have been counted for the Cybertruck. Just to reiterate, Rivian Automotive hopes to produce a total of 50,000 EVs, across all of the company’s models, this year.
The point is, it seems like RIVN stock may have gotten ahead of itself. The shares doubled in price in June and July. One has to wonder whether the stockholders fully appreciate Tesla’s serious threat to Rivian Automotive’s top and bottom lines.
Pick Your Buy Price With RIVN Stock
Rivian Automotive can still thrive in the coming quarters. However, Rivian’s customers are waiting a long time to get their vehicles delivered. Also, it won’t be easy for Rivian Automotive to compete with Tesla and its highly anticipated Cybertruck.
If the short-term sentiment surrounding Rivian Automotive is too bullish right now, there’s a solution. Just be patient and wait for RIVN stock to pull back below $20. Then, feel free to consider a long position if you’re on board with Scaringe’s confident vision for the EV market.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.