Jim Cramer on Rivian Automotive (RIVN): ‘Don’t Expect Anything Big Anytime Soon’
We recently published a list of Jim Cramer Latest Portfolio: 10 Stocks to Watch in September. Since Rivian Automotive Inc (NASDAQ:RIVN) ranks 6th on the list, it deserves a deeper look.
Jim Cramer said during his latest program on CNBC that the Federal Reserve wanted to contain inflation and make sure it’s going in the “right direction” before initiating its first rate cut. With the first aggressive rate cut, Cramer believes “most businesses” can thrive.
Cramer, who is currently in Silicon Valley, said technology companies are, however, not “hostage” to the Fed and they are “automaters.” He said these companies are trying to raise margins by automating “what can be automated.”
Jim Cramer said currently cash is flowing towards companies that “would have been doomed” if the Fed didn’t start cutting rates. He said this was “day one” in many more rate cuts to come, which would create a “backdrop of positivity” for the broader market.
For this article, we chose 10 important stocks Jim Cramer talked about during his latest programs on CNBC. With each company we have mentioned the number of hedge fund investors. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Rivian Automotive Inc (NASDAQ:RIVN)
Number of Hedge Fund Investors: 37
When asked about Rivian Automotive Inc (NASDAQ:RIVN) in a latest program, Jim Cramer said Rivian has “got the money to be able to make it.”
“That does not mean the stock is a buy it does mean they are gonna make it.”
Cramer recommended the questioner to let the stock “percolate” and do not expect anything big anytime soon.
Morgan Stanley analyst Adam Jonas in July said Rivian Automotive Inc (NASDAQ:RIVN) AI potential could match that of Tesla’s. Morgan Stanley’s optimistic view on Rivian is that the electric vehicle maker is uniquely positioned, apart from Tesla (TSLA), to scale a fully integrated software stack critical to harnessing the broad AI opportunity. This AI potential could attract investors at a market value 1/60th that of Tesla. The AI factor significantly contributes to Morgan Stanley’s bullish price target of $33 for Rivian Automotive Inc (NASDAQ:RIVN).
Rivian Automotive Inc (NASDAQ:RIVN) has suddenly become interesting after the company signed a deal with Volkswagen according to which the German company will invest a whopping $5 billion in it for a joint venture to develop next-generation software-defined vehicle platforms.
During the second quarter, Rivian Automotive Inc (NASDAQ:RIVN) delivered 13,790 vehicles, slightly up from 13,588 in the previous quarter and much higher than 12,640 in the prior-year quarter. Production took a hit as the company’s Illinois plant was closed for about 25 days as it was upgrading it to streamline production processes. Rivian is going through a cost-cutting and efficiency-boosting phase.
Amazon also has a significant stake in the company and Rivian plans to provide the e-commerce giant with 100,000 electric delivery vans (EDVs).
While Rivian Automotive Inc (NASDAQ:RIVN) is still a loss-making company, it expects to swing to a “modest” profit by the end of this year.
Meridian Hedged Equity Fund stated the following regarding Rivian Automotive, Inc. (NASDAQ:RIVN) in its first quarter 2024 investor letter:
“Rivian Automotive, Inc. (NASDAQ:RIVN) is a US-based manufacturer of electric vehicles, namely the R1T pickup truck and R1S SUV. They also have exposure to the commercial vehicle market with their electric delivery vans (EDVs) that are sold to companies like Amazon. The company has faced challenges amid the broader slowdown in electric vehicle demand and rising interest rates. This has contributed to Rivian underperforming expectations over the past few quarters. Rivian has also incurred losses as it continues to invest in the development of its products and manufacturing capabilities. We own Rivian in a hedged structure, which provides a significant margin of safety. Despite the near[1]term challenges, several factors provide optimism that Rivian can emerge as a long-term winner in the EV market. Rivian’s balance sheet is strong, with a substantial cash position that enables the company to continue investing in its growth and navigate through the current economic headwinds. Rivian is also unveiling the R2, which is a smaller and more affordable EV platform that will open the company’s products to a wider customer base. Lastly, Rivian’s investment in the enhancement of its production capabilities should improve the company’s manufacturing efficiency and drive a path to profitability. We continue to hold the company in a hedged structure.”
Overall, Rivian Automotive Inc (NASDAQ:RIVN) ranks 6th on Insider Monkey’s list titled Jim Cramer Latest Portfolio: 10 Stocks to Watch in September. While we acknowledge the potential of Rivian Automotive Inc (NASDAQ:RIVN), our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than RIVN but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.