If You’d Invested $500 in Rivian Inventory 3 Years In the past, This is How A lot You’d Have Immediately
Rivian (NASDAQ: RIVN) inventory went public in 2021 to nice fanfare. On the time, shares traded at a price-to-sales ratio of 60. That kind of valuation is usually reserved just for hypergrowth firms.
If you happen to had put $500 into Rivian inventory the day it went public, how a lot would you have got proper now? The reply would possibly shock you.
A $500 funding in Rivian would now be value this a lot
Investing in progress shares will be tough. Rivian is an ideal case research. When the corporate went public practically three years in the past, it was producing annual gross sales of round $500 million. During the last 12 months, nevertheless, whole gross sales had been round $5 billion.
In three quick years, the corporate has managed to spice up gross sales by practically 1,000%. However what has the inventory carried out? Over that very same time interval, Rivian shares have misplaced practically 90% of their worth. A $500 funding in 2021 can be value simply $51 at this time. Ouch!
What’s the primary takeaway right here? It is that an organization will be rising quickly and nonetheless not make for a great funding. That is as a result of the corporate’s long-term funding worth is a direct perform of its cumulative (eventual) returns, and that ought to decide the value you pay. Traders in 2021 merely paid an excessive amount of for Rivian inventory. Its income progress through the years has been spectacular, however the market had initially priced in much more progress. The corporate had too excessive of expectations from the market baked into its inventory value.
Is Rivian inventory a purchase at this time? There are several reasons to be optimistic, particularly now that the valuation has come all the way down to an affordable 2 occasions gross sales. However let Rivian’s historical past be a lesson to us all that inventory value actions do not at all times observe an organization’s progress trajectory.
Do you have to make investments $1,000 in Rivian Automotive proper now?
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Ryan Vanzo has no place in any of the shares talked about. The Motley Idiot has no place in any of the shares talked about. The Motley Idiot has a disclosure policy.
If You’d Invested $500 in Rivian Stock 3 Years Ago, Here’s How Much You’d Have Today was initially revealed by The Motley Idiot
