We recently compiled a list of the Jim Cramer’s 10 Go-To Stocks for Success. In this article, we are going to take a look at where Rivian Automotive Inc. (NASDAQ:RIVN) stands against Jim Cramer’s other go-to stocks for success.
In a recent episode of Mad Money, Jim Cramer offers a perspective on Nvidia and its recent market behavior on Wednesday’s episode of Mad Money, presenting a straightforward analysis of the company’s stock performance and the broader implications for investors. Cramer notes that owning the company’s stock was easier when the company was less well-known. As the company has become a major market focus, it’s attracted significant attention and criticism, which is evident after its recent financial report.
“Once you get this big, to the point where you become the focal point of the entire stock market, you’re going to have a target on your back. And that’s exactly what I think happened tonight to the stock after the firm reported a fine and dandy set of numbers. But fine and dandy is no longer enough for this incredible company.”
Despite reporting impressive numbers—122% revenue growth, a 152% increase in adjusted earnings per share, and a $50 billion buyback— the firm’s stock fell after hours. This reaction reflects high expectations that may have become unrealistic. The stock market as a whole suffered due to pre-quarter jitters surrounding the company, with declines in major indices like the Dow, S&P 500, and Nasdaq Composite. The drop in the firm’s stock price after the earnings report, coupled with concerns about its influence on the broader market, has led some to call this period the GPU maker’s “buzzkill quarter.”
“The Dow declining 59 points was bad, the S&P losing 0.6%, and the Nasdaq Composite 1.12%. And now, with the stock sinking after hours, we could be in for a hangover from what they’re already calling the company’s buzzkill quarter. But the people saying this might as well be having a watch party—yes, there was one—but there’s nothing to celebrate here. Move on.”
Cramer emphasizes that the company’s role in artificial intelligence is significant, but its overemphasis has become a burden on the market. The company’s market capitalization has skyrocketed from around $500 billion to over $3 trillion in just 18 months. Cramer suggests that the company’s immense importance might be overblown and that a recalibration might benefit the market.
“We know that artificial intelligence is the way of the future, and it’s the best bet on AI. But the company has become an albatross around the market’s neck because no one stock should be a proxy for the future of the S&P 500. Yet, that’s exactly what’s happened as the company has grown from around $500 billion in market cap just 18 months ago to more than $3 trillion now. Maybe after tonight, it will shed that millstone—like Apple did. You know what? That would be a godsend for all of us.”
Cramer expresses frustration with how quickly concerns about the company have spread to the broader tech sector, although he acknowledges that companies like Salesforce reported positive numbers. Cramer concludes by advising investors to diversify their portfolios beyond just tech stocks. He suggests that while diversification might seem less exciting, it is a crucial strategy to mitigate risks associated with over-reliance on a single sector or stock.
“It felt like insult added to injury when there was no injury to the company. It will muddle through and recharge at its next iteration. Blackwell goes boring, and we see renewed expectations. I hope they don’t get excessive like they were tonight.”
Our Methodology
This article reviews a recent episode of Jim Cramer’s Mad Money, where he discussed ten stocks he believes have significant growth potential. It also looks at how hedge funds view these stocks and ranks them based on their level of hedge fund ownership, starting with the least owned and moving to the most owned.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A state-of-the-art electric vehicle charging at a station at a suburban mall.
Rivian Automotive Inc. (NASDAQ:RIVN)
Number of Hedge Fund Investors: 37
Rivian Automotive Inc. (NASDAQ:RIVN) is solidifying its position as a leader in the electric vehicle (EV) market by focusing on adventure and off-road vehicles. Its flagship models, the R1T pickup truck and R1S SUV, cater to customers looking for rugged and high-performance electric options, giving Rivian Automotive Inc. (NASDAQ:RIVN) a competitive edge in this growing niche. Rivian Automotive Inc. (NASDAQ:RIVN)’s strong partnerships, especially with Amazon Inc. (NASDAQ:AMZN), have further strengthened its market position.
Amazon Inc. (NASDAQ:AMZN)’s order for 100,000 electric delivery vans provides a significant revenue boost and supports Rivian Automotive Inc. (NASDAQ:RIVN)’s production scale. Rivian Automotive Inc. (NASDAQ:RIVN)’s ability to scale production at its Illinois factory and its plans for future expansions are designed to meet the increasing demand. Its strategy of vertical integration—managing its own battery production and software development—improves control over its supply chain and product quality.
In its latest Q2 2024 earnings report, Rivian Automotive Inc. (NASDAQ:RIVN) reported a notable revenue increase to $1.12 billion from $364 million the previous year, driven by higher production and deliveries. Rivian Automotive Inc. (NASDAQ:RIVN) delivered 12,640 vehicles in the quarter, surpassing expectations. Despite a net loss of $1.35 billion, this loss was smaller than expected, highlighting better operational efficiency as production ramps up. Rivian Automotive Inc. (NASDAQ:RIVN)’s technological advancements, such as its unique “skateboard” platform, enhance performance and off-road capabilities.
Rivian Automotive Inc. (NASDAQ:RIVN)’s focus on next-generation vehicles and improved autonomous driving features positions it well for future growth in the EV sector. Investor sentiment is positive due to Rivian Automotive Inc. (NASDAQ:RIVN)’s growth potential and strategic positioning. Rivian Automotive Inc. (NASDAQ:RIVN)’s emphasis on sustainability, a strong order backlog, and increasing consumer interest support its long-term growth. With plans for a new factory in Georgia and continuous software updates improving vehicle features, Rivian Automotive Inc. (NASDAQ:RIVN) is well-positioned to thrive in the global shift towards electric mobility, especially in the premium and adventure vehicle segments.
Baron Fifth Avenue Growth Fund stated the following regarding Rivian Automotive, Inc. (NASDAQ:RIVN) in its first quarter 2024 investor letter:
“Shares of Rivian Automotive, Inc. (NASDAQ:RIVN), a U.S.-based EV manufacturer, declined 53.3% in the first quarter. Despite substantial improvements in production and delivery volumes in 2023, as well as an improvement in unit economics, Rivian’s business remains constrained by its limited scale, which creates pressure on gross margins, and contributes to the company’s elevated cash burn. Additionally, Rivian expects to temporarily shut down its production facilities for upgrades, impeding anticipated production growth in 2024. Compounding these challenges is the potential for demand headwinds due to the continued complex macro environment, and the relatively small automotive segments that Rivian’s initial products target. Nevertheless, the recent unveiling of Rivian’s mass-market products, the R2 and R3, garnered enthusiastic responses, evidenced by over 68,000 pre-orders within the first 20 hours post-launch. In a strategic move, management opted to produce the R2 in Rivian’s existing facility, deferring the construction of a new factory. This decision should help reduce mid-term capital expenditure obligations while ensuring higher utilization of current facilities as the R2 ramps production in 2025. We remain shareholders.”
Overall RIVN ranks 7th on our list of Jim Cramer’s go-to stocks for success. While we acknowledge the potential of RIVN as an investment, our conviction lies in the belief that under the radar AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than the ones on our list but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
