Okay folks, so in a period of the stock market where you could make a bearish argument for pretty much anything and you'd probably end up being right, and in a period of time where we are most likely heading into a recession if we aren't already in one, well, it's more important than ever to consider that throughout most of history, recessions have almost always been very painful. but expansions are a lot more powerful and enjoyable then recessions are painful. And so, if history is any indicator, it almost always makes sense to plan very diligently and get ready for the next expansionary period. especially considering that when no one believes they're ever going to come again, that's when you get the best deals.

But in order to adequately take advantage of these kinds of periods and plan for whenever the next expansionary period comes, you have to be very, very careful of what you pick. You have to find a stock that has three different attributes: Number one is going to survive a recession, number two is going to have greater growth rates than the rest of the market coming out of the recession, and number three is cheap enough where you have a lot of margin for error. And so today, I want to give you a rundown on Rivian stock, a stock that quite frankly, exchanges couldn't keep off the metaphorical shelves just last fall. Now it's down 80 plus from highs, and there's people saying it will go to zero dollars and that even the bigger eevee companies are going to be destroyed.

You also have Ford starting to sell off their stake in review and dumping an additional 7 million shares. last week. Amazon's bad earnings report was largely accelerated by its stake in Rivian. It reported a quarterly loss of 3.84 billion, owing entirely to a 7.6 billion dollar loss in the value of its stock investment in Rivian Automotive, and the market's bold case for Rivian was well.

Here you finally have an electric vehicle startup that's making electric Suvs that go outdoors or rugged and have a sense of adventure, Ones that are practical, good looking, and fit a demand segment of American society and global society that other companies just haven't really been able to do. at least not in the electric vehicle space. People like capability, utility, and that sense of freedom that comes with owning something that you can take anywhere, even if it's usually used to just drive around suburbs. And then of course, you also have the Amazon angle, and you still have that one.

Amazon owns roughly eighteen percent of equity, and Rivian as part of a deal for Rivian to fulfill a hundred thousand electric delivery vans. The fact that this e-commerce giant not only has a embedded relationship with Rivian, but also as a company that actually needs a ton of delivery vehicles and wants to go electric to meet carbon standards while also having a stake in it is a big stake in deal, and it's something that any other startup would kill for. Not to mention of course the other benefit which is the fact that Rivian gets all this free press. Rivian gets used as the vehicle in transporting passengers for Jeff Bezos Blue Origin Mission launches.

But of course there's the story, the dreams and the hopes and the aspirations. And then there's the reality. What has happened to Rivien? Well, number one, of course, Jerome Powwell, chopping multiples on everything, but especially destroying companies that are in the early stages. Obviously, you also have inflationary concerns fueling the cost of materials and labor to rise faster than most companies can even raise prices to keep up with.

In fact, with a company like Rivian where you have to operate at a big loss before you get to mainstream production, Well, if you get into an inflationary environment, what happens? Well, all of those losses are exaggerated dramatically because now labor costs are skyrocketing, as well as of course, material costs, Then of course you always have the supply chain issues that don't just raise prices, but also make it so you can't even buy the things that you need for your vehicles. Another thing that delays the production capacity of a lot of these companies, and Rivien included. And then finally, and of course, the most recently relevant is the recessionary aspect. Once you're in a recession, people aren't going to be doling out as much cash to buy expensive Suvs, less people are going to be able to afford them.

And of course, borrowing costs are going to go through the roof. Caribbean's ain't cheap. They're pretty damn expensive, and you put all this together and it's like, okay, Well, I get why Rivien stock has been bludgeoned so much, but of course, markets and bear periods tend to dramatically dramatically discount the future. It tends to unanimously assume that the future is very, very bleak because the current day and the current macro trends that we're heading into are bleak.

But it makes a mistake in assuming that things will never turn around, and thus, you should discount it almost entirely. And if you can find opportunities that have been overly discounted that are actually going to shine quite a bit like a big damn star in the upcoming years, well, you may want to go star catching. And so, my two questions for Rivian are: Number One: Can it survive a recession? What about an extended recession? Number two: Can it come out? On the other hand, and once you start getting into a strong economic environment, grow faster than competitors and also faster than the rest of the market. So how do you survive a recession? Well, it really really depends on how aggressive of a recession we have.

You could have a mild, a medium, or an apocalypse level recession if rates go up to 50 or 60 or 70 percent. All of a sudden, you're in that apocalypse scenario and half the population turns into zombies that are trying to eat each other. Now I don't know about you, but if I had to choose between, I don't know, a Tesla Model 3 or a Rivien to survive a zombie apocalypse. I got to tell you, I choose the Rivian.

Quite frankly, it seems like it would be more helpful, But what about a normal recession? Well, you have to have adequate cash on hand. You have to have the ability to control your losses and allow those losses to take place over a long enough time horizon where you can stay in business. You also have to have a string of backup potential orders that are going to be fulfilled over the next couple years, regardless of what happens or the ability to get capital infusion from partners if need be. We'll start with cash with cash and cash equivalent.

You're looking at roughly 16.4 billion dollars Reported quarter end March 31st. they are running. They are burning roughly 1.45 billion a quarter right now. At the current pace.

they have about 11 quarters until they run out of dough. That's just under three years. That's actually a pretty decent amount considering that their liabilities in terms of debt servicing costs are very, very low, and they could certainly extend out a little bit more there and get some more financing if they really need to. But three years is plenty of time, especially considering that you're in the early stages of scaling up and that's more expensive.

but once you get down to bigger production numbers and you're actually meeting their goals which their goal was originally 150 000 cars by late 2023, even if that takes an extra six months, the amount of capital infusion coming from selling vehicles is going to make up for a lot of the shortfalls that they're paying for right now, and loss losses are going to crunch dramatically. Burn rate should be a lot slower when you actually get to mature production, because in the beginning, when you're just building the ability to get to mature production, you have to take all those losses up front. But over the long run, when you actually start selling vehicles and producing in mass that evaporates, they're certainly not going to be profitable any time soon. But if you think about it in terms of burn rate, they're in a pretty damn good position because they raised so much capital at that frothy ipo last year.

If things get bad enough in the global economy, it's not like Rivian can't just slow down their production scaling up, spread out their losses over more years, and then just come out swinging on the other side. It's not like they have to consistently burn at the same pace. They can make decisions and operational decisions based on what the economy is saying is appropriate at the time. The way that I see it is their cash and cash equivalents buy them a lot of options here.

Of course you also have the hundred thousand Amazon order and other fulfillment orders that will provide future sales boosts and cash infusions and derivation and ward off some of the early scaling up loss numbers. And of course also if demand drops because people can't afford new cars or don't want to buy new cars, then again, they have other orders to work on, so it's not really going to be a big problem. And by the time they fulfill all these orders well, you're going to be on the other side of this and hopefully the economy is better. What about growth? Well, my original numbers on Rivian where they do something like 10 000 personal and 10 thousand commercial in 2022, which were well below their estimates at the time because I felt like they were kind of fluffing their numbers to get some better ipo capital in, and then in 2023 you get 45 000 and then 20 000 respectively.

And then of course you had at that time, an onslaught of 55 400 pre-orders to be fulfilled sometime mid to late 2023.. Now, the way that things stand now, Rivian has actually downgraded their output expectations for this year. In terms of how many vehicles they're going to produce. They've downgraded it to 25 000, which is still above my estimates.

I still think that they're not going to hit the 25 000 based on how rough the supply chain situation is, but could be wrong. Doesn't make a huge difference, you have to look at an overall trend. Markets wouldn't care right now if they doubled on those estimates because this is just such a bad market condition anyways, but they're definitely not going to do that. But what they do have is they have 90 000 pre-orders which is like 80 more than they had last fall, and they also have 5 000 vehicles produced and behind their belt.

If you have the ability to produce and build and deliver 5 000 vehicles, at least you have the operational capacity to handle production. Just a question of how fast can you scale that up with materials and capital requirements? And if you think about what 90 000 vehicles pre-ordered on top of the 100 thousand initial orders from Amazon and what that means, that means that if demand dries up quite a bit and Rivien stops getting new orders, while still, they'd have a huge backlog of orders anyways to work through, and that will allow Rivien to grow the revenue pretty sizably regardless of what the economy is doing, and also consider that the 100 000 vehicles ordered from Amazon are just the initial order odds are strong given Amazon's stake, and given the massive demand that Amazon has for delivery vehicles, that they're probably going to expand that quite a bit over the years, but that's more of a later stage type of thing when Rivien has already met mass skill production. So in terms of whether Rivien will survive a recession, I'd say very, very likely. And in terms of whether or not they're going to have a business during the recession or be able to make progress during a recession, I'd argue they could lose probably half or even three quarters of their pre-orders from the personal market, and they'd still be busy enough with just the Amazon orders and what was left of the pre-orders to sizeably scale up in the next couple of years and be better than most other startups out there.

But what is actually a good deal on Rivien stock? Well, you can argue in Jerome Powell's market, nothing is safe. there's no good price on any stock as long as we're raising rates and retightening monetary policy at an unprecedented level. And you'd probably be right. But in terms of the long run, I'd argue the most clear and cut way to see whether or not something is a good deal is to look at the net asset value.

What is it worth If you strip away everything except just what the company owns assets minus liabilities, Rivian's total assets, including cash and cash equivalents plus property and other related assets, comes in at about 21.297 billion. You subtract liabilities at 3.037 billion. You're looking at 18.26 billion in no Bs net worth now. Obviously, we've discussed in the past that this market has gotten so so fearful that a lot of companies that are scaling up huge and have insane growth numbers are trading below their net asset value, sometimes a decent amount below it.

So it's not like that's a floor level. But if you think about it from a logical standpoint, I personally refuse to believe that Rivia, a company that has shown its ability to get substantial demand company who has a hundred thousand orders from Amazon and probably going to have a lot more which is also partially owned by Amazon, which will serve as proof of concept for other companies that need fulfillment vehicles. Well, I refuse to believe if you put all that together that that's not at least worth the net asset value. If you just gutted it tomorrow Again, I get it in a fearful market, things are worth nothing.

Things will go as low as fear allows them to go. But if you want the best no Bs valuation where you're like, okay, I feel good about this price. I think at or slightly below the net asset value is where you want to be. Right now, the company is trading at about 25.21 billion in market cap.

That's just under a seven billion dollar premium over asset value. So if you want a no-nonsense valuation to buy that, I'd argue wait until the valuation drops to net asset value or again slightly below it, which would roughly be something like 17 bucks a share and the next wave of sell-offs is almost certainly going to give us that opportunity. So anyways, that's my thought process on it Quite frankly, for somebody that doesn't believe in the long-term growth of the eevee sector or the tech sector, or even the broader economy, this isn't the play. If you're somebody who thinks that we're going to be in the situation for the next 5, 10, 15, 20 years, this isn't the play.

If you're somebody that believes that we're going to head into a really rough situation the next two quarters, the next three quarters, The next year, maybe even the next two years, this may end up being a very, very good deal in hindsight, because on the other side of this, I think this is going to have some of the most impressive numbers. Anyways, folks that caps off the video, make sure to hit that ravishing like button and also subscribe if you want to learn how to trade rather violently with our step-by-step lessons, private chat, daily morning briefings as well as our full price target list. I'll put a link to Zip Creator You down below. Make sure to use coupon code Charlie Fever to get yourself a nice discount before checkout.

And if you're looking to get up to five free stocks with Moomoo and try out an excellent trading app, make sure to hit that link down to Moomoo down below. Have a good one folks, and I'll see you in the next video.