Rivian (RIVN) Stock May Be 32% Undervalued As R2 Hopes Grow
By Google News Motors ·
Rivian Automotive has seen its share price move sharply over the past few years, and the latest bounce has renewed a simple question for investors. Is the current US$13.61 price actually supported by the cash the business is expected to generate over time, or is the recent optimism running ahead of those cash flows?
The stock's next move may depend on whether the intrinsic value estimate from the Discounted Cash Flow (DCF) model supports or challenges the price implied by Rivian Automotive's current share level.
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The Discounted Cash Flow (DCF) model values Rivian Automotive based on the cash it could generate for shareholders over time. The latest twelve month free cash flow shows an outflow of about US$4.3b, and analyst projections still have Rivian using cash for several more years before moving to positive free cash flow around 2030, followed by subsequent growth.
Those cash flow forecasts imply recovering and then expanding economics, which results in a DCF estimate that is substantially above the current US$13.61 share price. UBS highlighting R2 production and a path to positive automotive gross profit helps explain why the cash flow curve in the model improves over time, even if the current price still reflects the heavy spending phase more than the later cash generation.
Find out what Rivian Automotive could be worth using our Discounted Cash Flow (DCF) estimate.
Simply Wall St Narratives pick up where this valuation puzzle leaves off, explaining which assumptions about Rivian Automotive's future margins, growth and earnings would need to hold for the stock to be worth meaningfully more or less than today's price on the Community page.
Each scenario links its figures to a specific view on how Rivian Automotive's growth, profitability and risk profile might evolve, giving you something concrete to revisit as new information becomes available.
Rivian Automotive splits opinion, with some community members seeing extra upside and others focusing on execution and funding strain.
Discover why this Narrative puts Rivian Automotive at 25% undervalued.
Explore why this Narrative puts Rivian Automotive at roughly fairly valued.
Before you lean too hard on any valuation output for Rivian Automotive, it is worth checking the separate set of risk checks that have already flagged specific concerns for this business. Take a closer look at 2 warning signs before settling on a valuation.
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Sasha is an Equity Analyst at Simply Wall St with 15 years financial markets experience. He is a CFA Charterholder and holds Bachelor degrees in Mathematics and International Studies from the University of Technology, Sydney, Australia. He worked at CommSec…
Originally published by Google News Motors
