Rivian’s Stock Grossly Undervalued? Fund Manager Predicts Tesla-Like Turnaround Following New Vehicle Line-Up Announcements

Rivian Automotive, Inc. (NASDAQ:RIVN) shares have seen a strong rebound from near record lows over the past two sessions, catalyzed by the unveiling of the electric-vehicle startup’s second-gen, affordable model R2, a smaller R3 model and a performance variant of the same model, codenamed R3X. A fund manager on Friday said the stock could be poised for further upside.

What Happened: “$RIVN [Rivian] reminds me of $TSLA [Tesla] in 2019 when naysayers predicted it would run out of cash and the equity would be worthless,” Gary Black said in a post on X. The fund manager sees Rivian’s production increase to 215,000 units once the Normal, Illinois plant is expanded for manufacturing R2.

The R2 production is currently planned at the Georgia facility.

Unit volume will likely increase to 400,000 units when the production of the third model, R3, begins at the Georgia facility. So, together, the analyst forecasts production of 615,000 in five to seven years.

Assuming an average selling price of $45,000 for Rivian’s vehicle lineup and a 20% auto gross margin, deliveries could hit 526,000 units by 2030, revenue to $22.7 billion and EBITDA to $2.5 billion, Black said.

Applying a 3.5 times EV/revenue multiple – equivalent to Tesla, Rivian’s shares could be worth $67 apiece by 2030. While discounting the stock price at a 14.1% equity discount rate, the net present value of the stock would be $30 per share, suggesting a 136% upside potential.

While valuing based on EV/EBITDA, applying a Tesla-equivalent multiple of 20 times gives Rivian a stock price of $45 per share by 2030 or $20 per share currently. The $20 per share price target suggests the stock offers 57% upside potential.