- This is not an investment but a speculative trade
- Upcoming IPO unlock (Ford could sell partial shares – not good if they do)
- Upcoming Earnings
- Market environment in 2022 has changed completely
A few weeks ago I made a video on Rivian stock analysis. I discussed the upcoming Rivian IPO and what that could mean for volatility on the name.
In this new video I cover some changed sentiments as we are closer to the Rivian earnings report. The big thing for me right now on Rivian and other SPAC/EV names is that the market is not rewarding the higher valuations like it was in years past.
The Rivian IPO was ridiculous and obviously the market agreed and sent shares lower on the name.
That changes how this stock could trade heading forward.
My issue with the long-term investment in Rivian stock is simple.
1. They are not profitable and it’s going to take a while.
2. There are better ways to put capital to work (this is dead money hence OTM calls for less capital allocation)
There are a lot of YouTube analysts covering Rivian stock analysis and we can discuss deliveries, DCFs etc. as much as we want but the one evident thing is that this stock is purely in a speculative state.
That is fine and many stocks back in the day (think Amazon) were losing money as well. That happens. But my belief in recoginizing that it is in this speculative state makes the difference in how I trade it.
And that is exactly what this is; a speculative trade.
The last earnings report saw Rivian lose money and that will happen for a while on this name. So that is a known and should not be a shock at the upcoming report.
What I am very curious to is the upcoming IPO unlock. IPO unlocks are where insiders can sell their shares and many times it can be a time where stocks see selling pressure. This is a good article on Investopedia to learn more about IPO unlocks.
But that I don’t care about as much as I do if Ford sells. Ford is an investor in Rivian and they reported a loss on their own earnings due to the Rivian stake. The concern of mine is if the CEO of Ford decides to sell part of the Rivian stake – that can be bad for the stock sentiment and right now this stock needs any positive news it can get.
Rivian Stock Analysis Conclusion
So to wrap this up. I do not think this stock is an investment in the short-term, it will take years and years to see a return. Further, this is not the market environment to be looking for speculative growth among rate hikes and a likely slow down in the economy. Easier said, capital allocation matters and there are better places to put your capital.
Finally, this is a pure speculation play for me where the risk will be sub $3,000 so I am ok taking a stab and being wrong.
Thanks for reading.