The U.S. has the second-largest auto market in the world, yet electric vehicles (EV) made up less than 10% of the market in 2021. Names like Tesla may be getting a lot of attention, but EV sales will have to grow sharply if the American market is to fully electrify its transportation anytime soon.
One challenge for the American market is the country’s affinity for trucks and SUVs. But a new EV startup called Rivian has caught the eye of investors since the company’s IPO by targeting both in its first consumer offerings.
If you are wondering how to buy Rivian stock, here’s what you need to know before going all in on this electric vehicle maker.
An overview of Rivian
Rivian Automotive, Inc., commonly known as Rivian, is an electric vehicle and technology company with headquarters in Irvine, California, and a main manufacturing plant in Normal, Illinois. The company was founded in 2009 by RJ Scaringe, who remains the company’s CEO.
Although Rivian has been around for a little over 10 years, it’s just beginning to scale up its production. The company’s first consumer vehicles, the Rivian R1T pickup truck and R1S SUV look promising, but production has been limited. As of March 2022, Rivian had delivered fewer than 1,500 vehicles compared to its 83,000 reservations.
Tech Crunch also reports Rivian also has a contract to produce 100,000 electric vans for Amazon through 2024. The company also plans to sell electric delivery vans to other companies beginning in 2023.
What you need to know about Rivian stock
Rivian went public on November 9, 2021, and is available for trading on the NASDAQ under the stock label RIVN. Rivian shares debuted on the NASDAQ with a price of $78 per share. As of the close of trading on June 13, 2022, Rivian shares were priced at around $28.
There’s rarely a single cause for a stock price rising or falling due to normal market volatility. For Rivian, though, the biggest issue appears to be its lag in production. As mentioned earlier, Rivian has produced fewer than 1,500 vehicles so far in 2022 and a grand total of only 920 vehicles in all of 2021.
Not only do these paltry delivery numbers harm investor confidence, but they also mean the company isn’t making a profit. In fact, Rivian posted a net loss of $2.46 billion for Q4 2021. For 2021 as a whole, the company recorded a net loss of $4.68 billion, more than four times its losses in 2020.
Even more worrisome, CEO RJ Scaringe doesn’t seem particularly bullish about Rivian’s immediate future. Due to pandemic-related disruptions in production and supply chains, chip shortages have been the talk of the auto industry. However, according to Scaringe, those are a "small appetizer to what we are about to feel on battery cells over the next two decades.”
Rivian isn’t alone. Battery supply issues for the EV industry are well documented. Major automakers are unable to get their hands on enough lithium to produce battery packs. The issue to watch right now is whether Rivian can solve that problem within its own supply chain.
How to buy Rivian stock
Because RIVN stock is listed on the NASDAQ, buying shares is easy. Your options include opening a traditional brokerage account or buying fractional shares.
Open a traditional brokerage account
One way to buy Rivian stock is with a traditional brokerage account. One thing to keep in mind if you’re not sure how to choose a brokerage is that they may offer services beneficial for beginners. This could include educational materials on stock market investing or access to financial advisors.
Many popular brokerage firms have also eliminated trading commissions so you won’t pay a fee to buy your shares.
Buy fractional shares
Fractional shares slice stocks into smaller pieces so you don’t have to wait until you can afford a full share. This makes them a welcome addition to the world of investing, especially if you are just getting started.
Let’s say you only have $50 to invest in EV stocks. In order to buy a whole share that costs $100, you’d have to save up more money. But with fractional shares, you can buy half of one $100 share for just $50. Some brokerages even let you buy smaller fractions of given stocks, allowing you to invest what you can right away.
One popular investment app that lets you buy fractional shares is Stash. This app is ideal for beginners because it guides you through the process of building your portfolio. You can use the fractional shares feature to buy RIVN stock, as well as popular companies like Apple, Amazon, and Tesla. Plus, the app lets you invest automatically through recurring transfers.1
Stash also includes a round-up feature, which is great if you are new to investing. With round-ups, every purchase you make with your linked debit card is rounded up to the nearest dollar. Once your spare change adds up to $5, Stash invests it automatically.
For more details, read our Stash review.
Is buying Rivian stock the right move for you?
If Rivian can live up to its potential, early investors could see a return on their investment. But remember that high rewards often come with high levels of risk. Across industries, the failure rate for new companies is 70% until the end of their 10th year. Remember that Rivian is also dealing with battery supply issues and not producing nearly enough vehicles.
It’s also worth considering the competition. While the electric truck segment is very much still developing, so-called legacy automakers are also starting to enter the EV market. Trucks such as the Ford F-150 Lightning or the Chevrolet Silverado EV could take over before Rivian has a chance to build momentum.
The best investment strategy is one that is tailored to you and considers your risk tolerance. Before making any investment decisions, it’s a good idea to sit down with a financial advisor and put together a strategy that works best for you. Doing so will help you achieve sustainable returns that help you meet your investment goals in the long term.
FAQs about Rivian stock
Is Rivian stock a good investment?
Whether Rivian stock is a good investment depends on your investment goals and your evaluation of the company. As of May 3, 2022, Rivian’s market cap was more than $28 billion. Yet, Rivian is still seen as having too high of a valuation, according to some Wall Street analysts.
You can also monitor the company’s quarterly earnings reports to see how they are doing. If you feel it’s trending in the right direction and is well-managed, it could be a good investment.
What will Rivian stock be worth in 5 years?
Rivian’s value in five years is difficult to predict. While that time frame isn’t that long in the life of a business, it’s an eternity in the stock market. Things change by the moment, and there are many factors that can influence a stock’s value all the time.
Some analyses predict that Rivian stock will see a big jump in the next year, but that may not happen if the company can’t scale up its production soon.
What would $1,000 invested in Rivian be worth today?
How much a $1,000 investment in Rivian would be worth today depends on when you invested and whether you continued buying additional shares. However, a simple example is one where you bought $1,000 of Rivian stock the day the company went public and held those shares until today.
Rivian stock was first listed on the NASDAQ at a price of $78 per share. At that time, $1,000 would have purchased 12 whole shares worth $936. As of June 13, 2022, Rivian stock was priced at around $28 per share. Thus, your 12 shares would be worth about $336 today.
What is the minimum required investment for Rivian?
The minimum investment for Rivian depends on the investment platform you use. Most won’t let you buy less than a full share. With some of the best investment apps, however, you can invest for as little as $1. Although you’ll only have a fraction of a share, you can continue putting additional money in until you own a full share.
Rivian is an intriguing investment opportunity, especially in these early days. It has the potential to meet the needs of an electric pickup truck, SUV, and van market that is largely untapped. Early investors can buy Rivian stock through one of the best brokerage accounts or with an investment app like Stash.
However, that is not to say that Rivian stock is necessarily the best choice for you. Rivian will have to overcome significant supply challenges to be successful. It’s best to meet with a financial advisor who is licensed to give investment advice for deciding whether to buy Rivian stock.
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