Rivian (NASDAQ: RIVN | RIVN Price Prediction) launched the vehicle that it has said for some time will be the key to its future. The R2 SUV is much less expensive than its current models. The base model (Launch Package) will cost about $58,000. The Rivian website put the price at $44,990.
However, each is lower than Rivian’s two other models. The base price for the R1T pickup is $72,990. The base price of the R1S SUV is $76,990. (Its price can rise to over $120,000 with a number of additional features.)
Rivian believes that demand for the R2 will be extraordinary. People can reserve one to buy. The reservation price is $100. At a low price, the number of people who sign up will not be indicative of demand
RJ Scaringe, Founder and CEO of Rivian, was excited. He said, “This vehicle reflects the passion and excitement of the entire Rivian team who have worked tirelessly to bring it to life. I can’t wait for customers to experience this vehicle.” Investors did not see it that way.
Just after the announcement, Rivian’s stock fell 6.6% to $15.73. It dropped another 3% today. It is down about 17% this year, while the S&P 500 is 8% higher.
It is only a guess, but investors may think the R2 is too little too late. Rivian only delivered 10,365 vehicles in the first quarter. That is miles behind EV market leaders Tesla (NASDAQ: TSLA) and BYD. Even some legacy car companies are doing better in terms of unit sales.
Rivian remains a dog of a company. In the first quarter of the year, revenue was $1.81 billion. The company’s net loss was $416 million.
For some reason, Rivian believes that a vehicle that is late to market and expensive, given that many Americans want lower-priced EVs, can turn around its fortunes.
Rivian still has a market cap of $21 billion, which is hard to defend. GM (NYSE: GM), one of the world’s largest car companies, has a market cap of $75 billion. Which one is overvalued?
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