Rivian (RIVN) is an upcoming EV company that a lot of investors are following as everyone tries to invest in the next “Tesla”.
I’ll admit that Rivian sells an impressive electric truck lineup compared to Tesla and Lucid. It doesn’t hurt that the company is backed by Amazon, too.
However, there are too many red flags to ignore at the moment in a tough inflationary environment for E companies.
Both Tesla and Lucid lowered their prices to stir up demand plus Rivian diluted shareholders with a $1.5 billion convertible note offering.
While Rivian may do well in 2024, I want to share 7 reasons why I’m avoiding RIVN stock right now.
7 Reasons Not to Buy Rivian Stock Right Now in 2023
RIVN Shares Have Lost 86% Of Its Value Since IPO
Out of all the recent EV IPOs, Rivian looks the most shady of them all. The company priced its IPO at $78 during the epic 2021 bull run in a sleazy attempt to dump its stock on naive retail investors.
Since IPO, RIVN shares are down 86% from its all-time high of $125. Investors have lost nearly all of their money on this highly overvalued EV company.
Management continues to dilute shareholders in an attempt to become “profitable” but in reality, most RIN bulls have lost nearly all of their money.
Rivian is Losing Oer $33,000 Per EV
In Q2 2023, Rivian lost $33,000 per EV sold but wants to slash the cost by $40,000 per vehicle to “break even”. This is simply damage control for a company that lost $6.6 billion in 2022.
This seems impossible without sacrificing quality in the short run. Companies make poor short-term decisions when losing too much money which costs the business more in the long run.
Rivian Stock Could Dip Below $10 Over the Next 6 Months
The current economic environment will probably get worse if the Fed continues rising interest rates. I predicted the US stock market would crash in 2023 because there are too many headwinds going on now.
Apple CEO Tim Cook sold AAPL stock for the first time in 2 years and I believe his personal investing moves are a good sign of the current US economy. When he sold AAPL stock in August 2021, it was just 2 months before the 2021 bull turned into a complete stock market collapse.
If the stock market crashes then companies with negative earnings will get crushed. RIVN shares would dip under $10 most likely.
Tesla’s Cybertruck Could Crush Rivian’s Appeal
Did everyone forget that Tesla’s cybertruck is coming to steal Rivian’s lunch? I believe Elon Musk will steal a lot of EV truck buyers from Rivian and hurt Rivian’s sales moving forward. Don’t underestimate Tesla’s control over the US and global EV market.
Rivian Insiders Have Been Dumping RIVN Stock
Insider buying and selling is a good indicator of a company’s health so when key insiders such as the CEO or CFO sell then it’s a terrible sign.
Riian CFO Claire Mcdonough sold RIVN stock twice over the last 3 months just before the $1.5 billion capital rise.
Not a single insider has bought RIVN shares since February 2023 because RIVN shares are grossly overvalued.
Rivian Shares Fell Below Its 200-Day Moving Average
Another bearish signal is that RIVN stock fell below its 200-day MA, which is a bad sign for RIVN bulls. With a $17 billion market cap, I don’t want to own RIVN shares right now due to further downside risk.
Higher Interest Rates Could Hurt EV Demand
Experts predict the Fed will continue raising interest rates into Q3 2024 so don’t assume the economy will bounce back anytime soon. Most consumers won’t be able to afford an EV unless prices come down even further.
Tesla can lower prices due to its huge $20 billion cash-on-hand stash but Rivian will only accelerate losses with lower prices.
Buy Tesla or Lucid Instead of Rivian
Rivian has a good chance of surviving the upcoming EV bust but I don’t think now is the time to buy RIVN stock.
I’m waiting until RIVN shares dip below $10 before I would consider building a position.