top partner

for CFD

Shares of electric truck maker Rivian Automotive (NASDAQ: RIVN) gained 5.9% through 2:20 p.m. ET Monday in response to news reports over the weekend that Rivian has secured final approval to build a new manufacturing facility east of Atlanta, Georgia.

A peach of a plant in Georgia

As website Teslarati reported Sunday, the Georgia Department of Economic Development, along with the Joint Development Authority of Jasper, Morgan, Newton, and Walton counties have agreed to let Rivian lease the nearly 2,000 acres it will need for its new electric vehicle (EV) facility, and proceed with developing the site for construction.

Rivian intends to use the new factory to build its next generation of EVs, dubbed the “R2” platform, which is intended to be a mass market EV, built and sold at a lower price point than the company’s current-generation R1T and R1S luxury trucks and SUVs (respectively).

Is this good or bad news for Rivian?

Short answer: yes. This is either good or bad news for Rivian, depending on how you look at it.

On the one hand, with archrival Tesla having just dropped a heavy hint last week that it’s getting ready to build the long-awaited $25,000 Tesla Model 2, Rivian really needs to get started on its response to that threat. And a lower-priced R2 Rivian sounds like the answer it has settled upon.

On the other hand, though, Rivian plans to invest $5 billion in the new factory — an investment that promises to eat up more than half the $9.1 billion Rivian has left after raising $12 billion in an initial public offering (IPO) two years ago. And the company was already burning through cash at the rate of more than $6.2 billion a year, according to the latest data from S&P Global Market Intelligence.

Between the cash it’s already burning and the new cash it plans to spend, Rivian seems all but certain to run out of money before the new Georgia factory begins churning out R2s in 2026 — which means that Rivian will probably need to raise some more cash in order to build this new factory.

Investors excited over Rivian’s prospects this afternoon may want to rethink that excitement, when it becomes apparent that Rivian will need to take on more debt — or sell more stock — to make its new factory a reality.

10 stocks we like better than Rivian Automotive
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now… and Rivian Automotive wasn’t one of them! That’s right — they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of November 6, 2023

Rich Smith 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.

Read the full story: Read More“>

Blog powered by G6

Disclaimer! A guest author has made this post. G6 has not checked the post. its content and attachments and under no circumstances will G6 be held responsible or liable in any way for any claims, damages, losses, expenses, costs or liabilities whatsoever (including, without limitation, any direct or indirect damages for loss of profits, business interruption or loss of information) resulting or arising directly or indirectly from your use of or inability to use this website or any websites linked to it, or from your reliance on the information and material on this website, even if the G6 has been advised of the possibility of such damages in advance.

For any inquiries, please contact [email protected]