Rivian Could Be Next Big M&A Target For A Legacy Automaker, Says Analyst In Bold Prediction

Electric vehicle startup Rivian Automotive, Inc. RIVN has experienced a remarkable surge in its stock price since late June, nearly doubling in value since June 26.

Future Fund Managing Director Gary Black has raised the possibility of Rivian becoming an attractive acquisition target in the EV market. 

What Happened: Black believes an established automotive manufacturer will acquire Rivian and utilize it as its EV platform. Unlike Lucid Group, Inc. LCID, which focuses solely on luxury sedans and addresses only 6% of the total addressable market, Rivian has a broader reach in the two fastest-growing segments: crossover utility vehicles and pickups, which together account for approximately 50% of the total addressable market.

Black highlighted the potential for Rivian to enter the $40,000 to $60,000 price segment once it achieves scale with its R1T pickup truck and R1S SUV. This segment qualifies for the IRS tax credit of $3,750-$7,500, providing additional incentives for potential buyers, he said.

See Also: How to Buy (RIVN) Stock

Why It Matters: In terms of valuation, Black considers Rivian to be undervalued compared to its competitors. While Rivian currently trades at a two-times multiple of enterprise value/2024 revenue, Lucid trades at 6.3 times and Tesla, Inc. TSLA at 6.7 times. 

Black suggested adjusting Rivian’s enterprise value by deducting its $11 billion net cash from the market cap, resulting in an enterprise value of $15 billion. Considering the projected vehicle sales for this year, Black believes Rivian’s enterprise value should be six times that of Lucid’s $16 billion.

Enterprise value per vehicle sold for 2023 would be $297,000 for Rivian, $462,000 for Tesla and $2 million f

or Lucid, the fund manager said.

Price Action: In premarket trading, Rivian shares experienced a slight decline of 0.46% to $25.91, while Tesla climbed 0.96% to $274.60 and Lucid gained 0.84% to $7.22, according to Benzinga Pro data.

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Related Link: Lucid Would ‘Likely Be Half’ Of Current Value If Not For This, Says Analyst After Stock’s 11% Slump: ‘Makes Absolutely No Sense’