Rivian to benefit from predecessors, analyst says

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And rivian is on a roll today the electric vehicle maker now has another bull under the hood truest initiating coverage of the company with a buy rating and a 65 dollar price target the stock is trading right now 34 by the way uh tru is citing its vertical integration unique technology and partnership with amazon joining us now jordan levy whose truest securities

Analyst in sustainable equity research jordan you got a lot of people talking with that 65 dollar price target walk me through your thesis yeah absolutely thanks for having me a kiko and i think what’s important to recognize is you know before getting into kind of the diversified model that they have in the integrated tech and all of that that makes for being a

Really interesting company but i think it’s important to recognize is that while this seems on a surface level to be a startup to a lot of company to a lot of uh consumers that are just seeing these cars start to get out that rj and his team have been building this business out for over a decade now and they have the benefit of all their predecessors that have

Come before them and so i think that’s an important underlying base of our thesis but going back to the 65 dollar price target when you look at the stock and where it is now down about 70 to 70 or so from its ipo price and of course the general market that we’re in really all we’re saying is we recognize that this company has taken a different approach they benefit

From their predecessors and seeing how they’ve scaled up uh they they understand that technology is underlying all things mobility going forward and so we believe that as they start to demonstrate that they can hit these production targets and that they’re executing on their plan the stock will trend back toward you know where it’s intrinsically valued and that’s

How we’ve looked at it so what i guess things you highlight jordan in your note is or rivian to control the stack if you will you talk about their control over the software their electronics landscape we’ve also heard so many companies talk about the supply chain and the challenges they’ve seen there that has trickled down into the manufacturing side of things why

Does rivian have an upper edge on that yeah absolutely i think that we saw early in rivian’s ramp that they were hurt by those challenges that they were facing and what the company has shown kind of as they scale up and we we think they’re actually in good position going into the second half of the year is that as they can show more comfort to suppliers that they

Are getting to these numbers that they’ve put out there they’ll get more of that tier one benefit which is what the price benefit and a volume benefit and so we think that as that sector starts to adjust and is able to meet these demands because rivian is still smaller in terms of you know global oems but is achieving kind of that tier one status we think they’ll

Benefit from that this is a company that is that big on the commercial side obviously they’ve got that huge partnership in place with amazon as well how much of that factors in to your price target when you think about the upside for rivian evs we tend to lump in as a whole but rivian’s got a bit of a different proposition because of their focus on the commercial

Side yeah we i mean we think it’s imperative to the business model in in terms of the fleet os system that they’ve been able to establish the partner with partnership with amazon and how they’ve integrated amazon systems into their cars into their vans rather uh we think it’s hugely differentiated we actually surveyed commercial fleet owners as part of our launch

160 commercial fleet owners and we found that not only did they find fleet management systems hugely important but they were underserved in the amount of fleet management systems out there so we think there’s a real niche to fill in that market once they get outside of amazon which is you know a great enough customer in and of itself finally jordan when you look

At from the top down view in the ev space you know we have seen these things go in cycles when gas prices go high interest in evs accelerate we’re starting to see it tick up just a little but it’s still well off the records that we saw over the summer where do you see adoption going from here how much of that is going to continue to be tied to gas prices you know

Those levels as opposed to really that technology and then just the availability of these cars out there yeah certainly i think we’ve passed a point where you need exceedingly high gas prices to spur ev adoption and i think as we go forward from the announcement from the global oems down to rivian and its competitors uh the availability of evs and over time the

Declining price curve uh will play a huge role and so yeah i think if you go back three four five years certainly that would be higher gas prices could be the make or break there i think we’ve passed that point but i i definitely think that on the margin it accelerates it where i think it really will accelerate adoption toward electrification is in the commercial

Space where the total cost of ownership is hugely important to commercial fleet owners and higher gas prices i think are can make or break the total cost of ownership profile of a vehicle jordan levy truest securities analyst in sustainability equity research good to have you on today

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Rivian to ‘benefit’ from predecessors, analyst says By Yahoo Finance