Ford stock has been on quite the run in recent months, gaining 13 percent in the first week of November and reaching a 20-year high as the automaker’s commitment to electric vehicles is steadily winning over investors. On the flip side, we have Ford-backed upstart EV automaker Rivian, which is preparing to go public via an IPO that’s expected to give it a valuation of around $65 billion with a targeted share price of $72-$74. While many are eyeing Rivian as the next Tesla – a company that recently became worth $1 trillion after its $260 million IPO back in 2010 – CNBC‘s Jim Cramer notes that he’d rather own Ford stock.
“Even if everything goes right for Rivian, this industry is getting a little crowded in here, Cramer said on his show, Mad Money. “When Tesla was starting out there was nobody else. Rivian’s got Ford’s F-150 Lightning hot on its heels, along with GM’s electric Hummer and even Tesla’s Cybertruck. Given that the company plans to offer 135 million shares, we’re talking about a $9.85 billion fundraise, which would make this the sixth- or seventh-largest IPO in U.S. history.”
Cramer does admit that people buying Rivian stock “won’t care about valuation” as they’re betting on the prospect that the company can effectively ramp up production and become a major competitor in the EV market. He also notes that Amazon and Ford’s investments in Rivian, as well as the large number of pre-orders the company has received thus far, “is a huge acknowledgment” of its potential to grow. Additionally, Ford CEO Jim Farley recently admitted that Rivian is a major threat in that space.
“If you really believe in Rivian, you’ve got my blessing to speculate,” Cramer concluded. “I’d much prefer to stay on the sidelines and get my electric vehicle exposure from Ford, which is why we own it for the charitable trust.”
We’ll have much more on Rivian very soon, so be sure and subscribe to Ford Authority for more Rivian news and around-the-clock Ford news coverage.
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