2 Ways Rivian Stock Can Spark a Rally in 2024



Rivian Automotive (NASDAQ: RIVN) looks as if one of many few electrical car (EV) automakers heading into 2024 with some momentum. Manufacturing bottlenecks are within the rearview mirror, cost-cutting measures are gaining traction, and gross revenue per unit is not off course, amongst different components.

However Rivian may additionally simply have two trump playing cards up its sleeve to spark a rally in 2024. This is what traders ought to preserve their eyes out for as we head into the brand new 12 months.

Leasing might be a boon

Broadly talking, chances are you’ll not suppose a leasing program could be a giant deal, and that is as a result of, general, leasing accounts for roughly 20% of recent car gross sales. However this is the kicker: Leasing is a large a part of luxurious or high-priced car gross sales.

The truth is, contemplate Common Motors‘ Chevrolet model, which sells an absurd quantity of high-priced full-size Silverado vehicles. It has a lease charge topping 50%. Additional, different high-priced luxurious manufacturers, akin to BMW and Audi, high 70%.

This issues loads as a result of potential Rivian prospects have been asking for a leasing program to purchase Rivian automobiles, which regularly begin round $78,000. In a manner, that is almost a no brainer transfer for the automaker that would spark demand by tapping into an incremental buyer base. A bonus for patrons is that leasing makes it simple for the producer to wrap the federal tax credit score into the acquisition worth.

Rivian is forecasting its full-year manufacturing to hit 54,000. At such a low quantity of gross sales, a small enhance from leasing may simply create extra demand to fill its accelerating manufacturing or maybe replenish its backlog of orders.

Savvy traders could be sensible to maintain tabs on Rivian’s brand-new leasing program, which at first will solely be accessible for the R1T — prospects must anticipate leases on the R1S SUV — and solely in 14 states that favor Rivian buyer demographics.

Whereas traders could be sensible to mood expectations that leasing will enhance demand early in 2024 — and administration hasn’t indicated it would — there is a honest argument to make that all through subsequent 12 months, leasing may enhance gross sales incrementally by 10% or extra, which may simply spark a Rivian rally.

Model new world

Rewind again to 2019, when Rivian and Amazon signed off on a deal for the previous to ship over 100,000 electrical supply vans to the e-commerce juggernaut. Amazon touted that over 10,000 had been on the highway and had delivered over 10 million packages.

Clearly, traders would nonetheless love Rivian and Amazon’s partnership to stay sturdy and for orders to maintain flowing, however the excellent news for traders is that this settlement is now not unique. Meaning the doorways at the moment are open for Rivian to promote its electrical vans to different shoppers on the lookout for supply fleets.

Now, this was all the time the plan — it is simply been accelerated. The unique settlement referred to as for the exclusivity to finish after the overall 100,000 electrical vans had been delivered by 2030, primarily giving Amazon first dibs on the inexperienced fleet.

This improvement might be huge for Rivian, which has been constructing relationships with a number of business operators with a give attention to delivering last-mile retail. Think about if Rivian was in a position to ink one other giant fleet deal for its electrical vans, or perhaps a handful. That information alone would pump optimism into the corporate’s long-term future, and the gross sales enhance may doubtlessly spark a inventory worth rally.

Is 2024 Rivian’s 12 months?

It has been a bumpy journey for Rivian, however the firm has momentum going into 2024, and if both of those potential catalysts positive aspects severe traction subsequent 12 months, it could be a boon to the inventory’s worth that has spiraled downward by roughly 80% since its preliminary public providing.

Do you have to make investments $1,000 in Rivian Automotive proper now?

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John Mackey, former CEO of Complete Meals Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of administrators. Daniel Miller has positions in Common Motors. The Motley Idiot has positions in and recommends Amazon. The Motley Idiot recommends Common Motors and recommends the next choices: lengthy January 2025 $25 calls on Common Motors. The Motley Idiot has a disclosure coverage.

2 Methods Rivian Inventory Can Spark a Rally in 2024 was initially printed by The Motley Idiot

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