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Gamblers Might Have a Shot with EV Upstart Rivian Automotive

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While it’s been an awful time for the underlying electric vehicle (EV) sector, upstart competitor Rivian Automotive (NASDAQ:RIVN) has finally given embattled shareholders something to cheer about with a solid performance for the first quarter. Notably, the company posted a narrower deficit on earnings per share than analysts had anticipated, a $1.43 EPS loss versus the expected loss of $1.45. That has many people rethinking RIVN stock, though it remains a speculative venture.

On the positive front, Rivian continued to stand by its ambitious production forecast of 25,000 vehicles for the year. In addition, management disclosed that the company has produced 5,000 EVs so far and that consumers preordered over 90,000 R1 vehicles. Per Rivian’s website, the R1T starts at $67,500 and the R1S starts at $72,500. These aren’t cheap rides. So, the fact that consumers are signaling their intent despite obvious consumer headwinds is deeply encouraging.

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Additionally, the EV manufacturer stated that it’s on track to open its new facility in Georgia in 2025. Valued at $5 billion, the site will produce Rivian’s upcoming R2 vehicle in 2025. The R2 is also significant because it will feature a single motor powertrain technology that will help drive down costs, thus enabling the model to compete against other companies in the potentially lucrative middle-income bracket.

On the not-so-pleasant side, Rivian suffered a sizable revenue miss, posting $95 million against the consensus target of $130.5 million. It’s still early in the game, so investors didn’t ding RIVN stock, which shot up nearly 18% following the earnings disclosure. Still, the miss is a reminder that the EV sector is volatile both technically and fundamentally.

Another factor to consider is that competing in lower income brackets may prove extraordinarily challenging. When you sell $70,000 vehicles, you have reassurances that your customers can pay for them because it’s such a steep price incline. But dip lower and you’re dealing with customers that suffer significantly from headwinds like inflation and surging rents.

Still, the one benefit that Rivian has is its premium and handsome EV offerings. With so many preorders, Rivian can seemingly compete with the heavy hitters like Tesla (NASDAQ:TSLA) and Lucid (NASDAQ:LCID). RIVN stock is wildly speculative — don’t get me wrong — but for the gambler, its overall fallout could make things interesting.

On the date of publication, Josh Enomoto 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.

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