In this article I’ll analyze and compare Rivian Automotive (RIVN) and NIO (NIO) to determine which electric vehicle manufacturer is currently a better buy.
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With more than 6.6 million EVs being sold worldwide in 2021, the electric vehicle (EV) industry is expanding rapidly. This figure indicates over a 100% increase compared to 2020. Besides, EV market share surged from 4.11% in 2020 to 8.57% in 2021, confirming current trends toward EV adoption.
The demand for low emission vehicles should accelerate in the forthcoming years, thus enabling the global EV market to grow at a CAGR of 22.6% to $802.81 billion by 2027.
In today’s article, I intend to analyze and compare two EV stocks: Rivian Automotive, Inc. (RIVN) and NIO Inc. (NIO), to determine which one is currently the better investment.
Founded in 2009, Rivian develops and manufactures electric pickup trucks and sports utility vehicles. RIVN became public through a traditional IPO on November 10th, 2021, by selling 153 million shares at $78.00 a share. NIO Inc. is a Shanghai-based company that develops, manufactures, and sells electric vehicles (EVs) in China, targeting the luxury electric SUVs segment. The company also offers a state-of-the-art subscription-based model for its batteries.
Year-To-Date (YTD), shares of Rivian Automotive dropped about 60%, and NIO stock lost around 44% over the same period.
Recent Developments
On March 1st, NIO reported delivery numbers for February. Despite the global supply chain disruptions, the company delivered 6,131 EVs in February, which is a 9.9% year-over-year increase. However, this figure is down 36% on a month-over-month basis. The shipments consisted of 1,084 ES8s, 3,309 ES6s, and 1,738 EC6s. It is also important to note that total deliveries hit 15,783 vehicles in 2022, up 23.3% year-over-year.
On March 2nd, Rivian announced a 20% price increase on its flagship quad-motor models amid inflationary pressures and higher component costs. As a result, the price for quad-motor versions of its electric R1T pickup increased from $67,500 to $79,500, while the quad-motor R1S SUV base price increased from $70,000 to $84,500. The company’s stock price decreased by over 11% following the announcement.
Recent Financial Performance & Analysts Estimates
Yesterday, on March 10th, Rivian’s shares dropped over 12% during the post-market trading session after the company had reported a lower than expected Q4 earnings report and weak 2022 production guidance. More precisely, the company’s fourth-quarter revenue stood at $54 million, driven by the delivery of 909 vehicles. However, RIVN failed to meet Wall Street revenue estimates, missing consensus by $6.72 million. Besides, RIVN disclosed a Non-GAAP EPS of ($4.83), missing Wall Street projections by $2.47.
The company’s Adjusted EBITDA loss stood at $1.11 billion compared to $341 million in Q4 2020. Besides, Rivian guides 2022 Adjusted EBITDA to be $4.75 billion, which is an over 70% increase as compared to $2.79 billion in 2021. In addition, the company plans to produce 25,000 vehicles in 2022 amid supply chain challenges.
For the current quarter, analysts project Rivian’s earnings to come in at ($1.20) per share. Its revenue for the first quarter of 2022 is expected to stand at $317.88 million.
NIO Inc. last issued its earnings results on Tuesday, November 9th. In the third quarter, the company’s total revenue increased 128% year-over-year to $1.52 billion, topping Wall Street’s revenue estimates by $50 million. Its vehicle sales came in at $1.34 billion, representing a 100.2% year-over-year increase. The company’s net loss has been reported at $569.7 million in Q3, down 42.9% compared to the year-ago figure. Consequently, NIO’s Non-GAAP EPS stood at ($0.06), beating analysts’ consensus by $0.04.
Besides, the company intends to recognize fourth-quarter revenue in the range between $1.46 billion and $1.57 billion. A ($0.16) consensus EPS estimate for the fourth quarter, ending December 31st, 2021, represents a moderate 0.74% decrease year-over-year. At the same time, its revenue for Q4 is expected to increase 50.20% year-over-year to $1.54 billion.
Comparing Options Market Sentiment
Looking at the June 17th, 2022 option chain for both RIVN and NIO, we can determine options market sentiment by comparing the calls/puts ratio. In RIVN’s case, the open calls/open puts ratio at the $45.00 strike price comes in at 0.17x, implying a strong bearish options market sentiment. When it comes to NIO, the open calls/open puts ratio at the $22.50 strike price stands at 1.19x, showing a bullish market sentiment.
The Bottom Line
I think NIO is currently a better long-term buy. Despite ongoing supply chain challenges, the company’s shipment figures for February and YTD look solid. Furthermore, NIO financials and forward growth potential look more persuasive. Finally, NIO has substantially better options market sentiment at the moment.
RIVN shares were trading at $38.09 per share on Friday morning, down $3.07 (-7.46%). Year-to-date, RIVN has declined -63.27%, versus a -10.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Oleksandr Pylypenko
Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist.
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