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1 No-Brainer Electric Vehicle (EV) Stock to Buy Right Now (Hint: It’s Not Tesla)
Tesla has proven to be one of the best investments of the past 10 years. Over that time period, sales by the ground-breaking electric vehicle (EV) maker have soared nearly 2,900% even as its stock price has vaulted by nearly 1,400% — substantially enriching its early investors.
But the electric vehicle industry remains in its infancy, and so it pays to seek out current opportunities. For those looking to invest in the next Tesla, there’s one up-and-coming electric car stock you need to be aware of now: Rivian Automotive (NASDAQ: RIVN). Here’s why.
More risk can create more reward
You’re likely well aware of the trade-off between risk and reward. But in practice, this trade-off is harder to determine. After all, there’s nothing guaranteeing you a higher potential payoff for taking on extra risk. It’s important, then, to stack the odds in your favor. That’s exactly what investors are getting with Rivian Automotive stock right now.
Let’s rewind time and look at what Tesla was up to nearly a decade ago, when its sales base was only around $5 billion. At that time, the company only had two high-end luxury models for sale: the Roadster and the Model S. Its first crossover, the Model X — also a luxury vehicle priced above $100,000 — would debut soon, but the market was growing increasingly wary that Tesla would ever be able to crack the mass market in any major way.
In 2014, Tesla shares were priced around 10 times sales. In 2016, that valuation slipped to 8 times sales. And by 2020, Tesla shares were priced below 2 times sales. CEO Elon Musk would later reveal that the company was “about a month” away from bankruptcy.
Would you have invested in Tesla right then? Without knowing the future, most investors would have stayed far away. Yet this was one of the best times in Tesla’s history to jump in. As sales from its mass market vehicles — the Model Y and Model 3 — began to gain traction, Tesla’s revenue more than tripled from 2020 through 2024, from $30 billion to more than $90 billion. Shares have soared more than 1,000% in value over the past five years due to the success of these two vehicles.
Right now, Rivian is about to follow the same trajectory. Earlier this year, it announced three new mass market models: the R2, R3, and R3X. Similar to what Tesla used to offer, Rivian only currently has a couple of high-end luxury vehicles for sale, the R1S and R1T, both of which cost around $100,000. The R2, R3, and R3X, meanwhile, are expected to be priced under $50,000 — similar to the Model Y and Model 3.
If these new models have the success that Tesla’s mass market vehicles had, expect Rivian’s sales base to soar. There’s just one problem: These vehicles aren’t expected to be delivered until 2026 at the earliest. Some versions may not hit the road until 2027 or 2028.
Suffice to say, the market remains skeptical, just as it was before Tesla’s major sales increase. Rivian stock is now priced under 2 times sales — a 75% valuation discount to Tesla — despite trading at a premium early on in its trading history. A lot can happen over the next few years, and Rivian will require billions in new capital to get to where it wants to be.
But if you’re willing to take on this extra risk and remain patient, there could be a sizable payday a few years down the road.
Use this strategy to profit with Rivian stock
Because there won’t be many hard catalysts for Rivian until its mass market vehicles hit the roads, expect the share price to be very volatile, reacting to small shifts in investor sentiment, and of course broader overall market swings.
For this reason, the best strategy for investing in Rivian stock is likely to employ dollar-cost averaging. Instead of putting $1,000 to work right away, for instance, you may want to split that sum into 10 $100 monthly investments. That way, your portfolio takes advantage of any temporary downswings in the share price.
But even if you employ dollar-cost averaging, the biggest skill you need to make money with Rivian stock will be patience. The market isn’t willing to value the company higher until it sees results. But that hesitancy is what’s creating today’s buying opportunity. You’ll just need to remain patient, willing to ride out or even take advantage of volatility in the stock price.
Should you invest $1,000 in Rivian Automotive right now?
Before you buy stock in Rivian Automotive, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Rivian Automotive wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $845,679!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
*Stock Advisor returns as of October 14, 2024
Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
1 No-Brainer Electric Vehicle (EV) Stock to Buy Right Now (Hint: It’s Not Tesla) was originally published by The Motley Fool
Sales of existing homes fell in September as house hunters remained on the fence about buying a home despite mortgage rates easing during the month.
Existing home sales slipped 1.0% from August’s tally to a seasonally adjusted annual rate of 3.84 million, the National Association of Realtors said Wednesday. That marked the lowest rate since October 2010. Economists polled by Bloomberg expected a pace of 3.88 million in September.
On a yearly basis, sales of previously owned homes were 3.5% lower in September. The median home price rose 3.0% from last September to $404,500, marking the 15th consecutive month of annual price increases.
“Home sales have been essentially stuck at around a 4 million-unit pace for the past 12 months,” NAR chief economist Lawrence Yun said in a press release.
There have been significant challenges that have weighed on sales activity, including a lack of inventory, escalating prices, and elevated mortgage rates. Last month, however, those factors turned around.
The Federal Reserve cut its benchmark rate by half a percentage point in September. While the central bank doesn’t set mortgage rates, its actions influence their direction of movement.
Mortgage rates hit the lowest level since February 2023 ahead of the Fed decision to ease, while listing inventory picked up.
But overall, that hasn’t been enough to entice buyers.
“Some consumers are hesitating about moving forward with a major expenditure like purchasing a home before the upcoming election,” Yun said.
Tesla (TSLA) reported mixed third quarter results after the bell on Wednesday, but the stock jumped in after-hours trading as investors cheered the earnings beat, higher gross margins, and news that Tesla’s cheaper EV is on track for production next year.
For the quarter, Tesla reported revenue of $25.18 billion vs. $25.4 billion per Bloomberg consensus, higher than the $25.05 billion it reported in Q2 and also topping the $23.40 billion Tesla reported a year ago. Tesla posted adjusted EPS of $0.72 vs $0.60 expected, on adjusted net income of $2.5 billion and free cash flow of $2.9 billion.
The closely watched gross margin figure came in at 19.8%, much higher than the 16.8% expected.
Tesla shares were up nearly 8% in after hours trade.
“We delivered strong results in Q3 with growth in vehicle deliveries both sequentially and year-on-year, resulting in record third-quarter volumes,” the company said in its earnings deck. “Preparations remain underway for our offering of new vehicles — including more affordable models — which we will begin launching in the first half of 2025.”
Earlier this month, Tesla (TSLA) announced third quarter deliveries that slightly missed expectations, sending the stock lower.
Tesla said it delivered 462,890 vehicles in Q3, up 6.4% quarter over quarter, to mark the first quarter of delivery growth this year. The numbers also came in ahead of the 435,059 EVs the company delivered in the year-ago period. But Wall Street had expected Tesla to deliver closer to 463,897, according to Bloomberg.
“Refreshed Model 3 ramp continued successfully in Q3 with higher total production and lower cost of goods sold quarter-over-quarter. Cybertruck production increased sequentially and achieved a positive gross margin for the first time,” Tesla said in its report.
Tesla said it expects vehicle deliveries to achieve “slight growth” in 2024.
Ahead of Tesla’s Q3 disclosure, shares were down approximately 11% since Tesla revealed its robotaxi, dubbed the Cybercab, at its showy “We, Robot” event from the Warner Bros. studio lot in Burbank, Calif., on Oct. 10.
The debut and release of a cheaper EV is what many analysts and industry watchers believe will spur the next leg higher of EV sales, as even CEO Elon Musk has said before. During its Q2 report, Tesla and Musk said the company remains on track for the production of new vehicles, likely including a cheaper EV, in the first half of next year.
Investors and analysts were left wanting more details from Tesla’s “We, Robot” event on the Cybercab itself and detailed testing plans, along with questions about the development of Tesla’s sub-$30,000 EV, dubbed the Model 2.
Transak disclosed a data breach affecting over 92,000 users after a phishing attack compromised an employee’s laptop.
CryptoCurrency
The Dow plummets more than 600 points and is on track for its worst day in more than a month
The Dow Jones Industrial Average and other major indexes suffered a steep decline Wednesday afternoon as the yield on the benchmark 10-year U.S. Treasury note continued its upward climb, reaching 4.23%—a level not seen since July.
In the afternoon, the Dow dropped 631 points, or 1.4%, heading for its worst day in over a month. Meanwhile, the tech-heavy Nasdaq and the S&P 500 declined by 2.2% and 1.4%, respectively. However, there was some relief for investors as oil prices eased, with West Texas Intermediate (WTI) futures trading around $70.65 per barrel.
The Federal Reserve’s Beige Book, released in the afternoon, reported that economic activity remained largely unchanged across the 12 Federal Reserve Districts, with the Southeast significantly impacted by a harsh storm season.
On Wednesday, all eyes are on Tesla (TSLA) as the company prepares to release its latest earnings report. Analysts expect earnings per share to be 60 cents, down from 66 cents a year ago but an improvement from 52 cents in the previous quarter, according to FactSet estimates. Revenue is projected to hit $25.4 billion, compared to $23.3 billion in the third quarter of 2023 and $25.5 billion in the preceding quarter.
Apart from Tesla, investors are closely monitoring earnings reports from other major corporations, including AT&T (T), Boeing (BA), and Coca-Cola (KO).
McDonald’s stock plunges over 5%
McDonald’s (MCD) shares took a sharp hit, falling over 5% after the Centers for Disease Control and Prevention (CDC) linked the chain’s Quarter Pounder burgers to an E. coli outbreak. The outbreak has led to 10 hospitalizations and one death, driving a significant decline in McDonald’s stock during the afternoon trading session.
As of now, 49 cases have been reported across 10 states between Sept. 27 and Oct. 11, with a majority of illnesses occurring in Colorado, Nebraska, Utah, and Wyoming. The CDC noted that most of those affected had eaten a Quarter Pounder. Investigators are working swiftly to identify the contaminated ingredient.
Spirit Airlines stock soars 30%
After a failed attempt at merging with JetBlue (JBLU-0.80%), ultra-low-cost carrier Spirit Airlines (SAVE+28.01%) is reportedly turning back to a familiar partner. The Wall Street Journal (NWSA-0.34%), citing people familiar with the matter, reports that Spirit and Frontier Airlines (ULCC+3.05%) are in early talks over a potential merger. The news sent Spirit’s stock soaring nearly 30% on Wednesday.
–Francisco Velasquez and Rocio Fabbro contributed to the article
The semi-autonomous region of Tanzania is taking advantage of a sandbox regulatory framework adopted in July.
Bitcoin’s correction ignited selling in altcoins, which are slipping below critical support levels.
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