Rivian Automotive: Strong Performance and Environmental Strategy Suggest a Buy Rating

Fundamental Analysis

Rivian Automotive, Inc. (NASDAQ: RIVN), a company that operates in the electric vehicle space, closed at $25.35 per share on July 25, 2023, marking a decrease of $0.46 (-1.78%) for the day. The trading volume stands at 45.27 million shares, which is roughly in line with its average trading volume of 45.32 million shares.

With a market capitalization of $23.61 billion, the company has had a wild ride for the past year. Its shares reached a year-high of $40.86 and a year-low of $11.68, demonstrating substantial volatility. However, it's important to note that Rivian is currently trading above both its 50 Day Moving Average of $17.31 and its 200 Day Moving Average of $20.31, indicating a current bullish trend in the stock.

However, looking at earnings, the company posted an Earnings Per Share (EPS) of -$7.4, which corresponds to a negative Price-to-Earnings (PE) ratio of -3.43--a potential red flag for investors seeking profitability and consistent earnings. The company's negative EPS indicates that it is not yet profitable, which is not uncommon for growth-oriented companies in the electric vehicle space.

The company's recent strategic shift deserves valid attention. The latest reports reveal Rivian's intent to sell 'Carbon-Neutral' add-ons through a collaboration with Starfire Mine and BrightNight, aiming to convert one of the largest coal mines in the U.S. into a solar energy center. This environmentally-friendly strategy hints at an attempt to capitalize on the intensifying concerns over climate change and the resulting shift towards green energy.

Technical Analysis

From a technical standpoint, the Relative Strength Index 14 (RSI14) posted at 70, suggesting that the stock might be entering an overbought territory. This could indicate a potential pullback or slowdown in the bullish momentum.

The Moving Average Convergence Divergence (MACD), a widely-used momentum oscillator, posts a positive 3-month reading at 4.52, indicating a buy signal, which indicates that the stock is likely gaining momentum.

Targets and Projections

Despite varying analyst targets ranging high at $147 to as low as $14, the median consensus for RIVN's stock price anchors at $35. The discounted cash flow (DCF) analysis places the intrinsic value at $38.02, which significantly overshadows the current trading price.

Final Evaluation

RIVN has been showing strong performance recently, backed by its environmentally conscious decisions, its position in a growing EV industry, and technical indicators pointing towards bullishness. However, the company's unprofitability and the sign of being potentially overbought need to be considered. Additionally, the current stock price is below the median consensus and DCF calculated prices.

Given the above evaluation and despite the noted risks, this analysis suggests a Buy rating on Rivian, primarily for long-term investments, considering anticipated growth in the EV market and the strategic changes the company is planning to implement.

For the next trading day, July 26, 2023, given the stock’s recent momentum, one could expect slight continued gains. However, considering the overbought RSI, a cautious approach is advised.

By the end of the upcoming week, the stock price will also be influenced by the broader market sentiment around electric vehicles and clean energy, as well as any additional company-specific news. The investors should continuously re-evaluate the position and adjust as necessary since substantial week-long stock predictions are fraught with increasing uncertainty.

This evaluation is based on the information currently available and can change based on market dynamics and the emergence of new information. Investors should carefully consider their financial situation, risk tolerance, and investment strategy before making investment decisions.