Looking at the sales growth for Rivian Automotive(NASDAQ: RIVN) in recent years, it's easy to believe that it's too late for new investors. But now is arguably the best time ever to bet on this high-growth electric vehicle (EV) stock. When you dig into the numbers, there's a lot to love about Rivian's valuation and prospects right now. Let's dive in.
One major reason it's not too late to invest in Rivian
Rivian's sales base has grown by more than 1,000% since its initial public offering (IPO) in 2021. But the stock price has fallen by roughly 90% over that time frame. What happened?
First, the hype for EV stocks in 2021 was simply way too high. There's a reason several EV makers decided to go public that year. Second, sales growth for EVs in general was below expectations.
EV demand is still rising by double digits globally, but when it comes to pricing a stock, expectations matter. Inflated expectations have caused Rivian's share price to suffer since the IPO, even though its underlying sales base has exploded.
RIVN data by YCharts; TTM = trailing 12 months, PS = price to sales.
Right now, we arguably have the opposite of the sentiment displayed in 2021. EV stocks are currently out of favor, as evidenced by Rivian's surprisingly cheap valuation. Shares just dipped below a price-to-sales ratio of 2.
Sales growth this year for several major EV makers -- Rivian included -- is expected to be close to flat. But long term, most demand forecasts still call for double-digit annual growth through the next decade and beyond.
Rivian has several mass-market vehicles set to hit to road in 2026, and investors willing to remain patient can lock in today's discounted valuation, betting that sales growth will normalize after a rare down year.
Don’t miss this second chance at a potentially lucrative opportunity
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*Stock Advisor returns as of October 21, 2024
Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
