Tesla Investor Expresses Confidence in Rivian, Foresees Bright Future Despite Recent Setbacks

In the wake of Rivian Automotive’s recent stock downturn, Tesla investor Gary Black has emerged as a staunch supporter of the electric vehicle (EV) manufacturer. Despite Rivian’s stock experiencing an intraday drop of over 8% and a cumulative loss of 25.60% due to discouraging 2024 production guidance, Black remains optimistic about the company’s potential. Here are four key reasons behind his positive outlook on Rivian:

1. Potential to Be Number 2: Black encourages Tesla investors to rally behind a strong number-two non-Internal Combustion Engine (ICE) player to expedite the world’s transition to sustainable energy. He highlights Rivian’s high-quality products, brand recognition, execution skills, absence of legacy ICE baggage, and competitive positioning. Black envisions Rivian coexisting with Tesla as a robust number-two player in the EV market by 2030.

2. Cash Position and Profitability: Black anticipates Rivian achieving gross-margin positivity by the fourth quarter and a significant reduction in cash bleed by the end of 2024. Dismissing concerns about capital adequacy, he emphasizes Rivian’s strong track record in raising capital and points out the company’s $9.4 billion in cash and marketable securities at the end of the fourth quarter.

3. M&A Probability High: Black suggests a high probability of Amazon, Rivian’s electric delivery van customer, acquiring the company. Even with a 50% premium, he believes Amazon could easily absorb Rivian’s enterprise value, which is expected to be under $10 billion. Black underscores Amazon’s substantial cash reserves, emphasizing the potential for a strategic acquisition.

4. Upcoming Catalyst: Black identifies the upcoming R2 launch event on March 7 as a significant catalyst for Rivian. He notes that the second-generation R2 platform will position Rivian in the $45,000 to $50,000 segments, foreseeing positive implications for the company’s valuation. Black also draws attention to Rivian’s current valuation, trading at 1.5 times 2023 revenue compared to Tesla’s 6.2 times, signaling potential upside.

As of the latest update, Rivian shares were down 7.9% to $10.54, according to Benzinga Pro data.

Future Fund’s Position: Future Fund Active ETF, managed by Gary Black’s fund, holds 3,700 Tesla shares valued at $730,417 and 20,852 Rivian shares valued at $238,755.

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