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2021-11-09

Amazon has a non binding 100k order of it's electric van. And if anyone thinks the Rivian can outperform a Ford F150 lightning in terms of order and deliverables... I would think again. And by the time any Rivian is on the road, most major brands would already have heirs and with proven production capabilities to boost.

Rivian IPO Puts Slow Race to Commercial EV to Public Market Test

2021-11-09

Great ariticle, would you like to share it?

Rivian: Even At A Lowered Valuation, Don't Buy This IPO

2021-11-09

This is a sobering review on Rivian. Whilst the bells and whistles of buying Rivian's shares at IPO is so enticingly magnetic, I urge anyone to just read this before you make any buy decision. Everykey selling point of Rivian is debunked and justified by the writer... and rightly so. I have and I am having second thought on Rivian. Instead I will wait for F to dip and buy in.

Rivian: Even At A Lowered Valuation, Don't Buy This IPO

2021-11-06

Really impressive article and research. [强]

Disney Is A Conviction Buy

2021-11-06

Starbucks' high debt is a concern that makes me the contrarian in this faceoff. I go with DIS.

Better Buy: Disney vs. Starbucks

2021-11-03

Set my eyes on this ticker

Electric vehicle maker Rivian seeks to raise $8.4 billion in IPO

2021-10-31

Jim Cramer just renamed FAANG into MAMAA. Meta Apple Microsoft Amazon Alphabet.

Facebook's Mark Zuckerberg just ruined one of the biggest investing abbreviations ever

2021-10-28

[财迷]

抱歉，原内容已删除

2021-10-26

What to buy before earnings?

抱歉，原内容已删除

2021-10-20

This is the next best thing since Bitcoin itself. Watch out for other ETFs coming soon but due to Proshares being the first Bitcoin ETF, it may just be the market leader.

2021-10-20

Those who missed out on the crypto due to high price can now dip into this etf while it is still affordable. [得意]

抱歉，原内容已删除

2021-10-10

$II-VI Inc(IIVI)$this stock is deeply integrated with Apple iPhone with its optical sensors and components. It is in a dip but clearly a great opportunity for those who has done their homework.

2021-10-06

$Breakwave Dry Bulk Shipping ETF(BDRY)$with YTD at 390% vs SP500's 14%, the wave is riding hight for this one.

2021-09-30

I am buying more.

抱歉，原内容已删除

2021-09-24

$Take-Two(TTWO)$Sep dip makes this a bargain as fair value is at USD199.76

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And if anyone thinks the Rivian can outperform a Ford F150 lightning in terms of order and deliverables... I would think again. And by the time any Rivian is on the road, most major brands would already have heirs and with proven production capabilities to boost.","listText":"Amazon has a non binding 100k order of it's electric van. And if anyone thinks the Rivian can outperform a Ford F150 lightning in terms of order and deliverables... I would think again. And by the time any Rivian is on the road, most major brands would already have heirs and with proven production capabilities to boost.","text":"Amazon has a non binding 100k order of it's electric van. And if anyone thinks the Rivian can outperform a Ford F150 lightning in terms of order and deliverables... I would think again. And by the time any Rivian is on the road, most major brands would already have heirs and with proven production capabilities to boost.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/844784547","repostId":"2182270315","repostType":4,"repost":{"id":"2182270315","kind":"news","pubTimestamp":1636440901,"share":"https://www.laohu8.com/m/news/2182270315?lang=&edition=full","pubTime":"2021-11-09 14:55","market":"us","language":"en","title":"Rivian IPO Puts Slow Race to Commercial EV to Public Market Test","url":"https://stock-news.laohu8.com/highlight/detail?id=2182270315","media":"Bloomberg","summary":"(Bloomberg) -- Eleven years after Tesla Inc. went public with a market value of less than $2 billion","content":"<p>(Bloomberg) -- Eleven years after Tesla Inc. went public with a market value of less than $2 billion, <a href=\"https://laohu8.com/S/AONE.U\">one</a> of its most closely watched competitors is following in its tire treads with a much richer valuation.&nbsp;Electric-truckmaker Rivian Automotive Inc. will price its initial public offering on Tuesday&nbsp;and&nbsp;start trading Wednesday, seeking to raise as much as $10 billion in a listing that could give it a fully diluted valuation of more than $70 billion. If shares are sold at the top of their marketed range, it’ll be the seventh-biggest U.S. IPO on record, data compiled by Bloomberg show.</p>\n<p>Investors will be buying into the promise of a class of EVs that mirror the gas-powered vehicles that dominate the passenger market: larger, bulkier vans and pickup trucks that are a sharp contrast to Tesla’s sleeker sedans. The company also has Amazon.com Inc.’s backing – the internet giant owns a 20% stake in Rivian and has placed an order for 100,000 of its delivery vans.</p>\n<p>As is the case with many richly valued startups, they’ll also be buying into ambitious growth plans. Rivian delivered its first vehicles just a couple of months ago and will only produce about 1,200 units by year-end at its plant in Normal, Illinois. The company estimates that annual production will hit 150,000 vehicles at its main facility by late 2023.</p>\n<p>While demand for Rivian’s products will likely outweigh supply for a number of years, the company faces a “natural ceiling” of 300,000 to 400,000 units per year, New Street Research analyst Pierre Ferragu wrote in a note Monday. That’s partly down to price: Rivian’s R1T truck starts at $67,500 for the most basic model, while its upcoming sport utility model is $70,000.</p>\n<p>“Above $70,000, the global addressable market for Rivian’s SUV and pickup is less than 1.5 million units, and it will be a crowded space,” Ferragu wrote.</p>\n<p>Stealth Mode</p>\n<p>Though it’s a newcomer to the public market, Irvine, California-based Rivian’s entry into the world of consumer electric vehicles has been more than a decade in the making.</p>\n<p>Founder and Chief Executive Officer R.J. Scaringe set-up the first iteration of what would become Rivian in 2009 in his home state of Florida.</p>\n<p>Early work centered around a smaller sports car, which was later shelved in favor of a rugged pickup at the direction of early investor Mohammed Abdul Latif Jameel.</p>\n<p>The company remained in stealth mode for almost 10 years, until the Los Angeles Auto Show in 2018 where Scaringe, who holds a doctorate from the Massachusetts Institute of Technology, showed his battery-electric pickup and SUV to the public for the first time.</p>\n<p>Read more: Rivian’s Long, Messy Road to Its First Electric Pickup Truck</p>\n<p>With deliveries having finally started in September, Rivian is the first automaker to bring a battery-electric pickup to market in the U.S. It’s also on track to make the most of its first-mover advantage when it starts deliveries of the R1S sport utility vehicle this year, giving it a lead in the market for full-size battery-electric SUVs.</p>\n<p>Competition, Amazon</p>\n<p>When competition arrives, it will be plentiful -- and often cheaper. Ford Motor Co. has more than 160,000 non-binding reservations for its F-150 Lightning, the electrified version of its best-selling pickup that starts around $40,000, though it doesn’t go on sale until next spring.</p>\n<p>General Motors Co., which walked away from potentially buying a stake in Rivian in 2019, will debut an EV pickup version of its iconic Hummer this fall. It also plans to unveil an EV version of the Silverado pickup at Consumer Electronics Show in January.&nbsp;Tesla, meanwhile, plans to start production on its futuristic Cybertruck pickup late next year at its new plant in Austin, Texas.</p>\n<p>Much of the recent optimism around Rivian’s potential valuation comes from Amazon’s backing of the automaker, and particularly its order for 100,000 electric delivery vans by the end of the decade.</p>\n<p>The deal for the vans is seen as a point of differentiation for Rivian, giving it some insulation from economic downturns that could hit consumer appetites for passenger EVs. Scaringe has prioritized building hundreds of delivery vans this year, people familiar with the plan told Bloomberg News in October, even though Amazon is under no obligation to actually buy any of them. Amazon Shapes Rivian’s Future and Hopes for $80 Billion IPO (1)</p>\n<p>Under the terms of the agreement, Seattle, Washington-based Amazon has exclusive rights to Rivian’s vans for a period of four years, with right of first refusal on all vans produced for another two years after that. Amazon is also permitted to work with other automakers on electric delivery vans.</p>\n<p>‘Next Tesla’</p>\n<p>“Rivian’s premium market valuation reflects its ownership of the entire value chain and freedom to innovate without dealing with stranded assets,” Pitchbook senior mobility analyst Asad Hussain said. “Between Rivian and Lucid, the market finally has credible candidates for ‘the next Tesla.’”</p>\n<p>Elon Musk’s Tesla, which recently joined the trillion-dollar-valuation club, might have its own ideas about that.</p>\n<p>A legal fight between the companies ramped up last month over Tesla’s claims that Rivian was poaching employees and, in the process, stealing “highly proprietary” battery technology. Rivian denied the claims, which it had accused Tesla in August 2020 of making up to stop employees leaving, and to stifle the growth of competitors.</p>\n<p>If Rivian hits, or exceeds, the market valuation of $63 billion that it’s aiming for in its IPO -- excluding employee stock options and restricted stock units -- it would eclipse decades-old automakers such as Japan’s Honda Motor Co., valued at about $53 billion, and France’s Renault SA at $11 billion.&nbsp;A first-day rally in the shares, which have characterized several recent IPOs by well-known companies, could see Rivian’s valuation top that of Ford, General Motors and fellow EV maker <a href=\"https://laohu8.com/S/LCID\">Lucid Group Inc</a>., which went public via a blank-check company in July and is now worth about $74 billion. Rivian was last valued at $27.6 billion in a funding round in January, Bloomberg News reported.</p>\n<p>Rivian plans to use the proceeds from its IPO for working capital, to fund growth and for other general corporate purposes, according to its listing paperwork. As well as ramping up hiring and increasing the volume of materials bought from its supply chain to meet demand, the company is also planning to build a second U.S. factory and is in talks with the city of Fort Worth, Texas, to invest $5 billion in a plant there. Rivian’s also eyeing a third factory in Europe, Bloomberg reported in January.</p>\n<p>The company had a net loss of $994 million in the first six months of 2021, compared with a $377 million deficit a year earlier, according to its filings. It expects to record a quarterly net loss of up to $1.28 billion due to costs associated with the start of production of the R1T.</p>\n<p><a href=\"https://laohu8.com/S/MSTLW\">Morgan Stanley</a>, Goldman Sachs Group Inc. and JPMorgan Chase &amp; Co. -- the same trio who lined up to take Tesla public -- are leading the offering. The company’s shares will trade on the Nasdaq Global Select Market under the symbol RIVN.</p>","source":"yahoofinance","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Rivian IPO Puts Slow Race to Commercial EV to Public Market Test</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nRivian IPO Puts Slow Race to Commercial EV to Public Market Test\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-09 14:55 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/rivian-ipo-puts-slow-race-050001996.html><strong>Bloomberg</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>(Bloomberg) -- Eleven years after Tesla Inc. went public with a market value of less than $2 billion, one of its most closely watched competitors is following in its tire treads with a much richer ...</p>\n\n<a href=\"https://finance.yahoo.com/news/rivian-ipo-puts-slow-race-050001996.html\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{},"source_url":"https://finance.yahoo.com/news/rivian-ipo-puts-slow-race-050001996.html","is_english":true,"share_image_url":"https://static.laohu8.com/5f26f4a48f9cb3e29be4d71d3ba8c038","article_id":"2182270315","content_text":"(Bloomberg) -- Eleven years after Tesla Inc. went public with a market value of less than $2 billion, one of its most closely watched competitors is following in its tire treads with a much richer valuation. Electric-truckmaker Rivian Automotive Inc. will price its initial public offering on Tuesday and start trading Wednesday, seeking to raise as much as $10 billion in a listing that could give it a fully diluted valuation of more than $70 billion. If shares are sold at the top of their marketed range, it’ll be the seventh-biggest U.S. IPO on record, data compiled by Bloomberg show.\nInvestors will be buying into the promise of a class of EVs that mirror the gas-powered vehicles that dominate the passenger market: larger, bulkier vans and pickup trucks that are a sharp contrast to Tesla’s sleeker sedans. The company also has Amazon.com Inc.’s backing – the internet giant owns a 20% stake in Rivian and has placed an order for 100,000 of its delivery vans.\nAs is the case with many richly valued startups, they’ll also be buying into ambitious growth plans. Rivian delivered its first vehicles just a couple of months ago and will only produce about 1,200 units by year-end at its plant in Normal, Illinois. The company estimates that annual production will hit 150,000 vehicles at its main facility by late 2023.\nWhile demand for Rivian’s products will likely outweigh supply for a number of years, the company faces a “natural ceiling” of 300,000 to 400,000 units per year, New Street Research analyst Pierre Ferragu wrote in a note Monday. That’s partly down to price: Rivian’s R1T truck starts at $67,500 for the most basic model, while its upcoming sport utility model is $70,000.\n“Above $70,000, the global addressable market for Rivian’s SUV and pickup is less than 1.5 million units, and it will be a crowded space,” Ferragu wrote.\nStealth Mode\nThough it’s a newcomer to the public market, Irvine, California-based Rivian’s entry into the world of consumer electric vehicles has been more than a decade in the making.\nFounder and Chief Executive Officer R.J. Scaringe set-up the first iteration of what would become Rivian in 2009 in his home state of Florida.\nEarly work centered around a smaller sports car, which was later shelved in favor of a rugged pickup at the direction of early investor Mohammed Abdul Latif Jameel.\nThe company remained in stealth mode for almost 10 years, until the Los Angeles Auto Show in 2018 where Scaringe, who holds a doctorate from the Massachusetts Institute of Technology, showed his battery-electric pickup and SUV to the public for the first time.\nRead more: Rivian’s Long, Messy Road to Its First Electric Pickup Truck\nWith deliveries having finally started in September, Rivian is the first automaker to bring a battery-electric pickup to market in the U.S. It’s also on track to make the most of its first-mover advantage when it starts deliveries of the R1S sport utility vehicle this year, giving it a lead in the market for full-size battery-electric SUVs.\nCompetition, Amazon\nWhen competition arrives, it will be plentiful -- and often cheaper. Ford Motor Co. has more than 160,000 non-binding reservations for its F-150 Lightning, the electrified version of its best-selling pickup that starts around $40,000, though it doesn’t go on sale until next spring.\nGeneral Motors Co., which walked away from potentially buying a stake in Rivian in 2019, will debut an EV pickup version of its iconic Hummer this fall. It also plans to unveil an EV version of the Silverado pickup at Consumer Electronics Show in January. Tesla, meanwhile, plans to start production on its futuristic Cybertruck pickup late next year at its new plant in Austin, Texas.\nMuch of the recent optimism around Rivian’s potential valuation comes from Amazon’s backing of the automaker, and particularly its order for 100,000 electric delivery vans by the end of the decade.\nThe deal for the vans is seen as a point of differentiation for Rivian, giving it some insulation from economic downturns that could hit consumer appetites for passenger EVs. Scaringe has prioritized building hundreds of delivery vans this year, people familiar with the plan told Bloomberg News in October, even though Amazon is under no obligation to actually buy any of them. Amazon Shapes Rivian’s Future and Hopes for $80 Billion IPO (1)\nUnder the terms of the agreement, Seattle, Washington-based Amazon has exclusive rights to Rivian’s vans for a period of four years, with right of first refusal on all vans produced for another two years after that. Amazon is also permitted to work with other automakers on electric delivery vans.\n‘Next Tesla’\n“Rivian’s premium market valuation reflects its ownership of the entire value chain and freedom to innovate without dealing with stranded assets,” Pitchbook senior mobility analyst Asad Hussain said. “Between Rivian and Lucid, the market finally has credible candidates for ‘the next Tesla.’”\nElon Musk’s Tesla, which recently joined the trillion-dollar-valuation club, might have its own ideas about that.\nA legal fight between the companies ramped up last month over Tesla’s claims that Rivian was poaching employees and, in the process, stealing “highly proprietary” battery technology. Rivian denied the claims, which it had accused Tesla in August 2020 of making up to stop employees leaving, and to stifle the growth of competitors.\nIf Rivian hits, or exceeds, the market valuation of $63 billion that it’s aiming for in its IPO -- excluding employee stock options and restricted stock units -- it would eclipse decades-old automakers such as Japan’s Honda Motor Co., valued at about $53 billion, and France’s Renault SA at $11 billion. A first-day rally in the shares, which have characterized several recent IPOs by well-known companies, could see Rivian’s valuation top that of Ford, General Motors and fellow EV maker Lucid Group Inc., which went public via a blank-check company in July and is now worth about $74 billion. Rivian was last valued at $27.6 billion in a funding round in January, Bloomberg News reported.\nRivian plans to use the proceeds from its IPO for working capital, to fund growth and for other general corporate purposes, according to its listing paperwork. As well as ramping up hiring and increasing the volume of materials bought from its supply chain to meet demand, the company is also planning to build a second U.S. factory and is in talks with the city of Fort Worth, Texas, to invest $5 billion in a plant there. Rivian’s also eyeing a third factory in Europe, Bloomberg reported in January.\nThe company had a net loss of $994 million in the first six months of 2021, compared with a $377 million deficit a year earlier, according to its filings. It expects to record a quarterly net loss of up to $1.28 billion due to costs associated with the start of production of the R1T.\nMorgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co. -- the same trio who lined up to take Tesla public -- are leading the offering. The company’s shares will trade on the Nasdaq Global Select Market under the symbol RIVN.","news_type":1},"isVote":1,"tweetType":1,"viewCount":870,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":844783186,"gmtCreate":1636460348672,"gmtModify":1636460348780,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"Great ariticle, would you like to share it?","listText":"Great ariticle, would you like to share it?","text":"Great ariticle, would you like to share it?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/844783186","repostId":"1174798558","repostType":2,"repost":{"id":"1174798558","kind":"news","pubTimestamp":1636447138,"share":"https://www.laohu8.com/m/news/1174798558?lang=&edition=full","pubTime":"2021-11-09 16:38","market":"us","language":"en","title":"Rivian: Even At A Lowered Valuation, Don't Buy This IPO","url":"https://stock-news.laohu8.com/highlight/detail?id=1174798558","media":"seeking alpha","summary":"Summary\n\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we t","content":"<p>Summary</p>\n<ul>\n <li>Despite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we think investors should avoid the temptation to buy Rivian shares.</li>\n <li>Rivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Tesla vehicles produced during the past 12 months.</li>\n <li>These manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.</li>\n <li>Looking for more investing ideas like this one? Get them exclusively at Value Investing 2.0 .</li>\n</ul>\n<p>Rivian (RIVN)is set to IPO next week with an expected valuation of ~$52 billion, the midpoint of its IPO price range. A $52 billion valuation is well below the $80 billion valuation the company originally sought, but it's still too high.</p>\n<p>Despite the popularity of the electric vehicle market and huge gains in Tesla’s (TSLA) stock, we think investors should avoid the temptation to buy Rivian shares.</p>\n<p>We're skeptical that Rivian’s IPO will deliver for investors even with the lower valuation. Investors shouldn’t buy a stock just because it’s in a hot sector.</p>\n<p>Rivian has yet to manufacture a meaningful number of vehicles and competes with well-capitalized electric vehicle upstarts as well as incumbents like General Motors (GM) and BMW, which both have decades of experience and multi-billion dollar plans to expand EV production.</p>\n<p>Rivian’s $52 billion valuation is about the same as Honda (HMC), which has world-class manufacturing capabilities and is investing heavily in a suite of electric vehicles. It makes no sense for Rivian to IPO with a valuation anywhere near Honda. Maybe, after several years of production and sales on par with Honda, Rivian would deserve a comparable valuation. But, to buy the stock at such a high price before the company has shown it can consistently produce more than a handful of cars seems ridiculous to us.</p>\n<p>Rivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Teslavehicles produced over the past 12 months and 66% more vehicles than Honda sold in the U.S. in 2020.</p>\n<p>These manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.</p>\n<p>Investments from Amazon(NASDAQ:AMZN)and Ford(NYSE:F)do nothing to justify the IPO valuation. Those investments were made at much lower prices and simply position these companies to participate in what appears to be a very lucrative IPO for private investors and owners.</p>\n<p>We believe the stock is worth $13 billion at best – a 75% downside to the midpoint IPO valuation of $52 billion.</p>\n<p>Below, we’ll outline the impracticality of Rivian meeting the expectations baked into the expected IPO valuation.</p>\n<p><b>$52 Billion Valuation Makes No Sense</b></p>\n<p>At its expected valuation of ~$52 billion, Rivian would be valued on par with Honda, a manufacturer that produced more than 4.5 million vehicles worldwide in fiscal 2021, and nearing Stellantis, BMW, and more. See Figure 1. At $1.2 trillion, Tesla’smarket cap is off the chart and is therefore excluded from Figure 1.</p>\n<p><b>Figure 1: Rivian’s Expected Valuation Compared to Competition</b></p>\n<p>Sources: New Constructs, LLC and company filings</p>\n<p><b>At Least Tesla Sold Vehicles Prior to IPO</b></p>\n<p>With no revenue from actual vehicle sales, investors need to understand that Rivian is in its infancy. Unsurprisingly,Core Earningswere -$398 million in 2019 and -$982 million in 2020 and the company burned -$2.5 billion in free cash flow (FCF) in 2020. In other words, the company looks more like a startup than one ready for an IPO. When Tesla went public in 2010 at a valuation of ~$1.7 billion, it was already delivering vehicles, and by the end of 2010, delivered over 1,500 units.</p>\n<p><b>Valuation Implies Rivian Will Take Huge Share of the Global EV Market</b></p>\n<p>With less than 200 deliveries of its R1T vehicle, Rivian doesn’t have significant sales to generate a meaningful average selling pricefor its vehicles. However, if we optimistically assume the starting price of $70,000 for its R1S as its ASP, Rivian’s expected valuation implies the company will sell 1.1 million vehicles in 2030, or 4% of theprojected global EV passenger vehicle marketin 2030.</p>\n<p>Meanwhile, Bloombergreportsthat Rivian is gearing up for production of upwards of 300,000 units, or just one-fourth the production implied by its expected IPO valuation. We think it's unlikely that Rivian will sell such a high volume of vehicles at a $70,000 ASP, and the implied vehicle sales based on lower ASPs look even more impractical.</p>\n<p>Per Figure 2, Rivian’s midpoint IPO valuation implies that, in 2030, it will sell the following number of vehicles based on different ASPs:</p>\n<ul>\n <li>1.1 million vehicles – ASP of $70k (starting price of Rivian’s R1S)</li>\n <li>1.5 million vehicles – ASP of $51k (equal to Tesla over TTM)</li>\n <li>2.0 million vehicles – ASP of $38k (average new car price in the U.S. in 2020)</li>\n <li>4.4 million vehicles – ASP of $17k (equal to General Motors over the TTM)</li>\n</ul>\n<p>If Rivian achieves those EV sales, the implied market share for the company would be the following (assuming global passenger EV sales reach 25.8 million in 2030, thebase case projection from the IEA):</p>\n<ul>\n <li>4% for 1.1 million vehicles</li>\n <li>6% for 1.5 million vehicles</li>\n <li>8% for 2.0 million vehicles</li>\n <li>17% for 4.4 million vehicles</li>\n</ul>\n<p><b>Figure 2: Implied Vehicle Sales in 2030 to Justify Expected Valuation</b></p>\n<p>Sources: New Constructs, LLC and company filings</p>\n<p>Buying stock in any company at a price that implies such huge market share gain is ill-advised, in our opinion.</p>\n<p><b>Doing the Math: $52 Billion Valuation Is Beyond Overvalued</b></p>\n<p>We use our reverse discounted cash flow model to provide more clarity, mathematical evidence that the expected IPO valuation is too high and offers unattractive risk/reward.</p>\n<p>In order to justify the midpoint of its IPO price range, Rivian must:</p>\n<ul>\n <li>Immediately achieve a 6% NOPAT margin (slightly below Tesla’s TTM margin) and</li>\n <li>grow revenue to $74 billion by 2030 (over 1.5x Tesla’s TTM revenue).</li>\n</ul>\n<p>In thisscenario, Rivian would generate $74 billion in revenue in fiscal 2030, which is 57% and 55% of General Motors’and Ford’sTTM revenue. This implied revenue is also used to calculate the implied vehicle sales in Figure 2 above, which are so high they warrant repeating. At an ASP of $70k, this scenario implies Rivian sells ~1.1 million vehicles in 2030, or 4% of the forecasted global EV passenger vehicle market in 2030. For reference, Honda sold 1.2 million vehicles in the U.S. in 2020.</p>\n<p><b>DCF Scenario 2: Growth at 5x Industry Expectations Equals 75% Downside</b></p>\n<p>We review an additional DCF scenario to highlight the downside risk even if Rivian’s revenue grows five times the expected industry growth rate.</p>\n<p>If we assume Rivian:</p>\n<ul>\n <li>immediately achieves a NOPAT margin of 6% and</li>\n <li>grows revenue to $25 billion by 2030, then</li>\n</ul>\n<p>RIVN is worth just $13 billion today – a 75% downside to the midpoint IPO valuation.See the math behind this reverse DCF scenario. In this scenario, Rivian would generate $24.7 billion in revenue in 2030, which is equal to Tesla’s 2019 revenue. At an ASP of $38k, the average new car price in the U.S. in 2020, this scenario implies Rivian sells 650,000vehicles in 2030, which is 110% of the number of Chevrolet Silverado’s sold in 2020 and 83% of the F-150s sold in 2020. For reference, this level of production is also 4x the maximum production capacity of the company’s Normal Factory.</p>\n<p>Based on our reverse DCF model, if the company cannot achieve at least five times the expected industry growth rate, the downside could be as much as 100%.</p>\n<p>Figure 3 compares Rivian’s historical NOPAT to the NOPAT implied by each of the above DCF scenarios. For additional context, we show Tesla’s, Stellantis’ and Ford’s TTM NOPAT. Notably, Honda’s TTM NOPAT, at $6.2 billion, is literally off the chart and is, therefore, excluded from Figure 3.</p>\n<p><b>Figure 3: Rivian’s IPO Valuation is Unreasonably High</b></p>\n<p>Sources: New Constructs, LLC and company filings</p>\n<p>Both of the above scenarios also assume Rivian grows revenue, NOPAT, and FCF without increasing working capital or fixed assets. This assumption is highly unlikely, especially given Rivian will need additional manufacturing plants to reach the production levels implied by its valuation, but allows us to create best-case scenarios that demonstrate the level of expectations embedded in the current valuation.</p>\n<p><b>Roadblocks to Justifying Rivian’s High Valuation</b></p>\n<p>Below, we present a few of the many challenges Rivian faces as it attempts to meet the expectations implied by its expected IPO valuation.</p>\n<p><b>Incumbents Are Coming for the EV Crown</b></p>\n<p>Incumbent automakers are highly profitable and generate billions in free cash flow by leveraging scale and manufacturing expertise. The advantages that incumbents have accumulated in the traditional auto market make their transition to the EV market easier than new entrants like Rivian and Tesla.</p>\n<p>We know from Tesla’s early days (filled with setbacks and delays) that it takes years to develop scale and manufacturing capabilities to routinely deliver a large number of quality vehicles on time. Rivian, despite investments from Ford that could help alleviate some early growing pains,already has delayed deliveryof its flagship vehicles. Any further delays could make some of the company’s pre-ordering customers, which total ~54,000 as of Oct. 31 for its passenger vehicles, look elsewhere. For comparison, Ford announced in October 2021 that it had over 160,000 reservations for its F-150 Lightning.</p>\n<p>In actual manufacturing, and not pre-orders, Ford, Volkswagen, General Motors, and on a smaller level Tesla, have already developed the necessary infrastructure to deliver vehicles at scale. Now, these incumbents are plowing headfirst with ample capital into the EV market, which diminishes Rivian’s ability to take market share. For example:</p>\n<ul>\n <li>Ford, which already introduced its Mustang Mach-E and F-150 Lightning, is increasing EV investments to$30 billionthrough 2025, andrecently announcedmulti-billion dollar battery and EV plants in Tennessee and Kentucky. As recently as May 2021, Ford projects that 40% of its sales, or 2.2 million units based on 2019 (pre-pandemic) sales, will be fully electric by 2030. This level of production would account for 9% of the International Energy Agency’s (IEA)base forecastfor EV sales in 2030.</li>\n <li>Volkswagen, Europe’s largest automaker, plans to invest almost $180 billion into EVs through 2025 and projects that50% of its global saleswill be fully electric by 2030, which would equate to 5.5 million vehicles based on 2019 sales. This number of vehicles would account for 21% of IEA’s base forecast for EV sales in 2030.</li>\n <li>General Motors plans to increase its investment into EVs to$35 billionthrough 2025 and plans to unveil an electric version of its Chevy Silverado in January 2022. General Motors is targeting EV sales of “more than 1 million” by 2025 which would give the company an 8% share of the EV market based on IEA’s base case for 2025.</li>\n <li>Tesla, the current world leader in EV sales, delivered more than 800,000 vehicles through the first three quarters of 2021 and isexpectedto deliver 1.3 million units in 2022. Despite delays, the company plans to introduce its Cybertruck and is in the process of building additional manufacturing plants.</li>\n <li>Stellantis, parent company of Dodge, Jeep, and Ram, recentlyannounceda partnership with LG to procure battery cells in North America and has noted its goals include having a zero-emission vehicle in every SUV segment by 2025.</li>\n</ul>\n<p>Ford, Volkswagen, and General Motors alone are planning to spend at least $245 billion through 2025 and produce nearly 9 million EVs by 2030. These numbers don’t include what other incumbents (Volvo, Honda, Jaguar Land Rover, Porsche, Mercedes, BMW, and more), and other new entrants (NIO, Lucid Motors, Lordstown Motors, and more) will contribute.</p>\n<p>Given that Rivian has not delivered a single vehicle to date, it is clearly chasing the competition at this point, and the competition has billions of dollars to spend to win the race.</p>\n<p><b>Incumbents Have Big Plans for SUVs and Trucks</b></p>\n<p>The incumbent manufacturers aren’t just throwing money at general EV goals or targets either. In fact, they’ve laid out clear plans to provide some of the most popular internal combustion vehicles in an EV format. Below are just some of the expected vehicles coming to the SUV/truck EV market:</p>\n<ul>\n <li>GM Hummer – 2021</li>\n <li>Bollinger B2 – 2021/2022</li>\n <li>Ford Lightning – 2022</li>\n <li>Chevy Silverado EV – 2023</li>\n <li>GMC Sierra EV – 2023</li>\n <li>Tesla Cybertruck – 2022/2023</li>\n <li>Canoo Pickup – 2023</li>\n <li>Ram 1500 Electric – 2024</li>\n</ul>\n<p><b>And Vans are Increasingly Competitive Too</b></p>\n<p>Competition will be fierce in the EV delivery van market as well, as manufacturers providing last-mile delivery trucks and vans look to maintain existing business with new EV platforms. Below are just some of the many delivery vans in production or scheduled for production.</p>\n<ul>\n <li>Fiat e-Ducato – already on sale in Europe</li>\n <li>Nissan e-NV200 – already on sale in Europe</li>\n <li>Ford E Transit – 2022</li>\n <li>BrightDrop EV600 – new GM brand for EV vans – 2022</li>\n <li>Workhorse C1000 – 2022</li>\n <li>Mercedes E Sprinter -already on sale in Europe – late 2023/early 2024 to US</li>\n</ul>\n<p><b>Partnerships Look Overhyped</b></p>\n<p>Many investors may get excited about Rivian’s partnerships with well-known companies like Amazonand Ford. However, when we dig into the details of these partnerships, they’re filled with hype and not much else.</p>\n<p><b>Amazon:</b>In 2019 Rivianannounceda partnership with Amazon Logistics Inc., (referred to in theS-1as “Logistics”) a subsidiary of Amazon which is responsible for last-mile delivery of Amazon’s retail operations. While it's reported that Amazon has ordered 100,000electric delivery vehicles (EDVs) from Rivian, under the terms of the agreement Amazon is under no obligation to actually purchase any vehicles. From the S-1:</p>\n<p>“While the EDV Agreement provides that we will be reimbursed for certain development costs, it does not include any minimum purchase requirements or otherwise restrict Logistics from developing vehicles or collaborating with, or purchasing similar vehicles from, third parties.”</p>\n<p>Additionally, Amazon Logistics has exclusive rights to purchase EDVs from Rivian for four years after the date of first vehicle delivery and a right of first refusal for an additional two years.</p>\n<p>In other words, Rivian cannot sell EDVs to any other company for four years after delivering its first vehicle to Amazon, whether or not Amazon decides to purchase any EDVs at all. The exclusivity clause of this agreement may significantly hamper Rivian’s ability to capture market share and allow more competitors to enter the EDV market uncontested.</p>\n<p><b>Ford:</b>Rivian also made headlines due to the investments from Ford, which now total nearly $800 million in Class B and D preferred stock. In 2019, Rivian entered into a purchase agreement with a Ford subsidiary, Troy Design and Manufacturing Co (referred to as TDM), for the supply of prototype and pre-production vehicles. Now that Rivian’s factory is up and running, it expects to discontinue purchases for this service from TDM.</p>\n<p>However, Rivian is still required to purchase certain key components for its R1 vehicle program exclusively from TDM for the life of the R1 vehicle program. Details on the rest of the partnership are unclear. Ford already cancelled plans to build a Lincoln EV based on Rivian’s platform in2020, stating that “it would be better to focus our development efforts on Lincoln’s own fully electric vehicle.” More recently, Ford executives left Rivian’s board of directors and Ford noted in astatementthat “Rivian is a strategic investment and we're still exploring ways for potential collaboration with them. We don't have anything to announce today.”</p>\n<p>While these partnerships were touted as legitimizing Rivian’s business, in reality, they look more like arms-length equity investments by Amazon and Ford. In its latest 10-Q, Amazon reported a 20% ownership interest in Rivian. In many respects, these partnerships hinder Rivian’s growth and cost model more than they help the company.</p>\n<p><b>Limited Addressable Market: Unable to Sell Cars in 28 States</b></p>\n<p>As of Sept. 30, 2021, Rivian is only allowed to sell its cars in 22 states and the District of Columbia, or less than half of the United States. In the other 28 states, which include the likes of New York, Texas, and New Jersey, Rivian is restricted from obtaining a dealer license to sell within the state (see page 148 of theS-1). While Rivian has shown that it can convince states to allow them to apply for a dealer’s license, it will be a long and expensive process to lobby each state individually.</p>\n<p><b>And Getting Service Could be Troublesome</b></p>\n<p>When it comes to fixing/repairing traditional vehicles, there are any number of options, from DIY, dealers, or auto shops. However, EVs require different repairs and getting service for a Rivian vehicle looks increasingly difficult.</p>\n<p>Eight states outright prohibit Rivian from owning or operating a service center providing warranty service (see page 148 of theS-1). While Rivian does have a plan to address these eight states, the solution is certainly not ideal for customers. Rivian has mobile service units which can be sent from neighboring states to reach customers in prohibited areas, and the company will offer towing services for broken cars to a state with a service location.</p>\n<p>However, as of today, Rivian has only six service centers in four states and only 11 mobile service vehicles (see page 3 of theS-1). For reference, Tesla has nearly 600 store and service locations and a mobile service fleet of nearly 1,100. GM, Ford, and Stellantis have a combined 9,600 dealerships throughout the United States.</p>\n<p>Rivian will need to spend significant capital, i.e. burn more cash, to build out a meaningful service network, or else it could see its service centers overfilled with a backlog of repairs, as we’ve alreadyseen with Tesla, which could damage demand.</p>\n<p><b>Stupid Money Risk Looks Low</b></p>\n<p>Given the multi-billion-dollar investments planned by the incumbents, we believe It's highly unlikely that Rivian will be acquired at its lofty expected valuation. Without delivering more than 200 vehicles, Rivian, at the midpoint of its IPO price range, already has a higher market cap than Honda and Nissan, and nearing Stellantis and BMW.</p>\n<p>Given that each of the competitors has its own manufacturing plants and existing vehicle platforms to leverage and build EVs, an acquisition of Rivian would be an extremely poor use of capital. Any acquirer would essentially be paying a massive premium to purchase the Rivian brand, which is still unproven in the auto market. It would be more cost effective for potential acquirers to compete with Rivian instead of acquiring them.</p>\n<p><b>Other Red Flags for Investors</b></p>\n<p>With a lofty valuation that implies likely unrealistic improvement in both revenue, profits, and market share, investors should be aware that Rivian’s S-1 also includes these other red flags.</p>\n<p><b>Insiders Have Majority Control</b>: Rivian will have multiple classes of common stock, with class A shares sold to the public and class B shares reserved for the founder and affiliates. Rivian discloses in its S-1 that Class A shares will have one vote per share and Class B shares will have 10 votes per share. After the completion of the IPO, the founder and early investors will hold 69% of the voting rights in the company. Amazon alone will hold 17% of the voting power.</p>\n<p>In other words, despite new investors paying a premium to buy the IPO and provide capital to the company, Rivian’s insiders and other owners will continue to control the company, and new shareholders will have little to no control over corporate governance.</p>\n<p><b>No Non-GAAP Metrics, Yet</b>: Many unprofitable companies present non-GAAP metrics to appear more profitable than they really are. However, Rivian discloses no non-GAAP metrics in its entire S-1. However, investors need to be aware that should such disclosure practice change, there is always a risk that non-GAAP metrics could be used to manipulate earnings going forward.</p>\n<p><b>We Don’t Know If We Can Trust the Financials:</b>Investors should take Rivian’s reported numbers with a grain of salt because the company identified a material weakness in its internal control over financial reporting. Specifically, the company identified a deficiency related to “controls to address segregation of duties across financially relevant functions and information technology general controls over tools and applications used in financial reporting.” As an emerging growth company, Rivian is not required to have an independent auditor provide an opinion on internal controls, so we’re glad the company chose to disclose this information.</p>\n<p>However, the company makes no assurances that the issues have been fixed, nor that it has identified all existing material weaknesses. From the S-1:</p>\n<p>“We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time… accordingly, we cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses.”</p>\n<p>Weaknesses in internal controls increase the risk that the company’s financials are fraudulent and/or misleading.</p>\n<p><b>Emerging Growth Status Limits Transparency</b>: By electing to operate as an “Emerging Growth Company,” Rivian is exempt from certain requirements that are beneficial to shareholders. For instance, and as noted above the SEC does not currently require Rivian to have an independent auditor provide an opinion on internal controls. Additionally, Rivian is not required to provide information on executive compensation structure and can delay adoption of certain accounting procedures, which limit the transparency of its financial statements.</p>\n<p><b>Critical Details Found in Financial Filings By OurRobo-Analyst Technology</b></p>\n<p>Below are specifics on the adjustments we make based on Robo-Analyst findings in Rivian’s S-1:</p>\n<p>Income Statement: We made $57 million in adjustments, with a net effect of removing $35 million in non-operating expenses. You can see all the adjustments made to Rivian’s income statementhere.</p>\n<p>Balance Sheet:Wemade $781 million in adjustments to calculate invested capital, with a net effect of decreasing invested capital by $725 million. The most notable adjustment was $3 million in operating leases. This adjustment represented &lt;1% of reported net assets. You can see all the adjustments made to Rivian’s balance sheethere.</p>\n<p>Valuation:Wemade $5.4 billion in adjustments to shareholder value, all of which decreased shareholder value. The largest adjustment to shareholder value was $5.2 billion in preferred capital. This adjustment represents 10% of the midpoint of Rivian’s IPO valuation. You can see all the adjustments made to Rivian’s valuationhere.</p>\n<p><i>This article originally published onNov. 3, 2021.</i></p>\n<p><i>Disclosure: David Trainer, Kyle Guske II, Alex Sword, and Matt Shuler receive no compensation to write about any specific stock, style, or theme.</i></p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Rivian: Even At A Lowered Valuation, Don't Buy This IPO</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nRivian: Even At A Lowered Valuation, Don't Buy This IPO\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-09 16:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4466233-even-at-a-lowered-valuation-dont-buy-rivians-ipo><strong>seeking alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we think investors should avoid the temptation to buy Rivian shares.\nRivian’s $52 billion valuation ...</p>\n\n<a href=\"https://seekingalpha.com/article/4466233-even-at-a-lowered-valuation-dont-buy-rivians-ipo\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"RIVN":"Rivian Automotive, Inc."},"source_url":"https://seekingalpha.com/article/4466233-even-at-a-lowered-valuation-dont-buy-rivians-ipo","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1174798558","content_text":"Summary\n\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we think investors should avoid the temptation to buy Rivian shares.\nRivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Tesla vehicles produced during the past 12 months.\nThese manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.\nLooking for more investing ideas like this one? Get them exclusively at Value Investing 2.0 .\n\nRivian (RIVN)is set to IPO next week with an expected valuation of ~$52 billion, the midpoint of its IPO price range. A $52 billion valuation is well below the $80 billion valuation the company originally sought, but it's still too high.\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s (TSLA) stock, we think investors should avoid the temptation to buy Rivian shares.\nWe're skeptical that Rivian’s IPO will deliver for investors even with the lower valuation. Investors shouldn’t buy a stock just because it’s in a hot sector.\nRivian has yet to manufacture a meaningful number of vehicles and competes with well-capitalized electric vehicle upstarts as well as incumbents like General Motors (GM) and BMW, which both have decades of experience and multi-billion dollar plans to expand EV production.\nRivian’s $52 billion valuation is about the same as Honda (HMC), which has world-class manufacturing capabilities and is investing heavily in a suite of electric vehicles. It makes no sense for Rivian to IPO with a valuation anywhere near Honda. Maybe, after several years of production and sales on par with Honda, Rivian would deserve a comparable valuation. But, to buy the stock at such a high price before the company has shown it can consistently produce more than a handful of cars seems ridiculous to us.\nRivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Teslavehicles produced over the past 12 months and 66% more vehicles than Honda sold in the U.S. in 2020.\nThese manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.\nInvestments from Amazon(NASDAQ:AMZN)and Ford(NYSE:F)do nothing to justify the IPO valuation. Those investments were made at much lower prices and simply position these companies to participate in what appears to be a very lucrative IPO for private investors and owners.\nWe believe the stock is worth $13 billion at best – a 75% downside to the midpoint IPO valuation of $52 billion.\nBelow, we’ll outline the impracticality of Rivian meeting the expectations baked into the expected IPO valuation.\n$52 Billion Valuation Makes No Sense\nAt its expected valuation of ~$52 billion, Rivian would be valued on par with Honda, a manufacturer that produced more than 4.5 million vehicles worldwide in fiscal 2021, and nearing Stellantis, BMW, and more. See Figure 1. At $1.2 trillion, Tesla’smarket cap is off the chart and is therefore excluded from Figure 1.\nFigure 1: Rivian’s Expected Valuation Compared to Competition\nSources: New Constructs, LLC and company filings\nAt Least Tesla Sold Vehicles Prior to IPO\nWith no revenue from actual vehicle sales, investors need to understand that Rivian is in its infancy. Unsurprisingly,Core Earningswere -$398 million in 2019 and -$982 million in 2020 and the company burned -$2.5 billion in free cash flow (FCF) in 2020. In other words, the company looks more like a startup than one ready for an IPO. When Tesla went public in 2010 at a valuation of ~$1.7 billion, it was already delivering vehicles, and by the end of 2010, delivered over 1,500 units.\nValuation Implies Rivian Will Take Huge Share of the Global EV Market\nWith less than 200 deliveries of its R1T vehicle, Rivian doesn’t have significant sales to generate a meaningful average selling pricefor its vehicles. However, if we optimistically assume the starting price of $70,000 for its R1S as its ASP, Rivian’s expected valuation implies the company will sell 1.1 million vehicles in 2030, or 4% of theprojected global EV passenger vehicle marketin 2030.\nMeanwhile, Bloombergreportsthat Rivian is gearing up for production of upwards of 300,000 units, or just one-fourth the production implied by its expected IPO valuation. We think it's unlikely that Rivian will sell such a high volume of vehicles at a $70,000 ASP, and the implied vehicle sales based on lower ASPs look even more impractical.\nPer Figure 2, Rivian’s midpoint IPO valuation implies that, in 2030, it will sell the following number of vehicles based on different ASPs:\n\n1.1 million vehicles – ASP of $70k (starting price of Rivian’s R1S)\n1.5 million vehicles – ASP of $51k (equal to Tesla over TTM)\n2.0 million vehicles – ASP of $38k (average new car price in the U.S. in 2020)\n4.4 million vehicles – ASP of $17k (equal to General Motors over the TTM)\n\nIf Rivian achieves those EV sales, the implied market share for the company would be the following (assuming global passenger EV sales reach 25.8 million in 2030, thebase case projection from the IEA):\n\n4% for 1.1 million vehicles\n6% for 1.5 million vehicles\n8% for 2.0 million vehicles\n17% for 4.4 million vehicles\n\nFigure 2: Implied Vehicle Sales in 2030 to Justify Expected Valuation\nSources: New Constructs, LLC and company filings\nBuying stock in any company at a price that implies such huge market share gain is ill-advised, in our opinion.\nDoing the Math: $52 Billion Valuation Is Beyond Overvalued\nWe use our reverse discounted cash flow model to provide more clarity, mathematical evidence that the expected IPO valuation is too high and offers unattractive risk/reward.\nIn order to justify the midpoint of its IPO price range, Rivian must:\n\nImmediately achieve a 6% NOPAT margin (slightly below Tesla’s TTM margin) and\ngrow revenue to $74 billion by 2030 (over 1.5x Tesla’s TTM revenue).\n\nIn thisscenario, Rivian would generate $74 billion in revenue in fiscal 2030, which is 57% and 55% of General Motors’and Ford’sTTM revenue. This implied revenue is also used to calculate the implied vehicle sales in Figure 2 above, which are so high they warrant repeating. At an ASP of $70k, this scenario implies Rivian sells ~1.1 million vehicles in 2030, or 4% of the forecasted global EV passenger vehicle market in 2030. For reference, Honda sold 1.2 million vehicles in the U.S. in 2020.\nDCF Scenario 2: Growth at 5x Industry Expectations Equals 75% Downside\nWe review an additional DCF scenario to highlight the downside risk even if Rivian’s revenue grows five times the expected industry growth rate.\nIf we assume Rivian:\n\nimmediately achieves a NOPAT margin of 6% and\ngrows revenue to $25 billion by 2030, then\n\nRIVN is worth just $13 billion today – a 75% downside to the midpoint IPO valuation.See the math behind this reverse DCF scenario. In this scenario, Rivian would generate $24.7 billion in revenue in 2030, which is equal to Tesla’s 2019 revenue. At an ASP of $38k, the average new car price in the U.S. in 2020, this scenario implies Rivian sells 650,000vehicles in 2030, which is 110% of the number of Chevrolet Silverado’s sold in 2020 and 83% of the F-150s sold in 2020. For reference, this level of production is also 4x the maximum production capacity of the company’s Normal Factory.\nBased on our reverse DCF model, if the company cannot achieve at least five times the expected industry growth rate, the downside could be as much as 100%.\nFigure 3 compares Rivian’s historical NOPAT to the NOPAT implied by each of the above DCF scenarios. For additional context, we show Tesla’s, Stellantis’ and Ford’s TTM NOPAT. Notably, Honda’s TTM NOPAT, at $6.2 billion, is literally off the chart and is, therefore, excluded from Figure 3.\nFigure 3: Rivian’s IPO Valuation is Unreasonably High\nSources: New Constructs, LLC and company filings\nBoth of the above scenarios also assume Rivian grows revenue, NOPAT, and FCF without increasing working capital or fixed assets. This assumption is highly unlikely, especially given Rivian will need additional manufacturing plants to reach the production levels implied by its valuation, but allows us to create best-case scenarios that demonstrate the level of expectations embedded in the current valuation.\nRoadblocks to Justifying Rivian’s High Valuation\nBelow, we present a few of the many challenges Rivian faces as it attempts to meet the expectations implied by its expected IPO valuation.\nIncumbents Are Coming for the EV Crown\nIncumbent automakers are highly profitable and generate billions in free cash flow by leveraging scale and manufacturing expertise. The advantages that incumbents have accumulated in the traditional auto market make their transition to the EV market easier than new entrants like Rivian and Tesla.\nWe know from Tesla’s early days (filled with setbacks and delays) that it takes years to develop scale and manufacturing capabilities to routinely deliver a large number of quality vehicles on time. Rivian, despite investments from Ford that could help alleviate some early growing pains,already has delayed deliveryof its flagship vehicles. Any further delays could make some of the company’s pre-ordering customers, which total ~54,000 as of Oct. 31 for its passenger vehicles, look elsewhere. For comparison, Ford announced in October 2021 that it had over 160,000 reservations for its F-150 Lightning.\nIn actual manufacturing, and not pre-orders, Ford, Volkswagen, General Motors, and on a smaller level Tesla, have already developed the necessary infrastructure to deliver vehicles at scale. Now, these incumbents are plowing headfirst with ample capital into the EV market, which diminishes Rivian’s ability to take market share. For example:\n\nFord, which already introduced its Mustang Mach-E and F-150 Lightning, is increasing EV investments to$30 billionthrough 2025, andrecently announcedmulti-billion dollar battery and EV plants in Tennessee and Kentucky. As recently as May 2021, Ford projects that 40% of its sales, or 2.2 million units based on 2019 (pre-pandemic) sales, will be fully electric by 2030. This level of production would account for 9% of the International Energy Agency’s (IEA)base forecastfor EV sales in 2030.\nVolkswagen, Europe’s largest automaker, plans to invest almost $180 billion into EVs through 2025 and projects that50% of its global saleswill be fully electric by 2030, which would equate to 5.5 million vehicles based on 2019 sales. This number of vehicles would account for 21% of IEA’s base forecast for EV sales in 2030.\nGeneral Motors plans to increase its investment into EVs to$35 billionthrough 2025 and plans to unveil an electric version of its Chevy Silverado in January 2022. General Motors is targeting EV sales of “more than 1 million” by 2025 which would give the company an 8% share of the EV market based on IEA’s base case for 2025.\nTesla, the current world leader in EV sales, delivered more than 800,000 vehicles through the first three quarters of 2021 and isexpectedto deliver 1.3 million units in 2022. Despite delays, the company plans to introduce its Cybertruck and is in the process of building additional manufacturing plants.\nStellantis, parent company of Dodge, Jeep, and Ram, recentlyannounceda partnership with LG to procure battery cells in North America and has noted its goals include having a zero-emission vehicle in every SUV segment by 2025.\n\nFord, Volkswagen, and General Motors alone are planning to spend at least $245 billion through 2025 and produce nearly 9 million EVs by 2030. These numbers don’t include what other incumbents (Volvo, Honda, Jaguar Land Rover, Porsche, Mercedes, BMW, and more), and other new entrants (NIO, Lucid Motors, Lordstown Motors, and more) will contribute.\nGiven that Rivian has not delivered a single vehicle to date, it is clearly chasing the competition at this point, and the competition has billions of dollars to spend to win the race.\nIncumbents Have Big Plans for SUVs and Trucks\nThe incumbent manufacturers aren’t just throwing money at general EV goals or targets either. In fact, they’ve laid out clear plans to provide some of the most popular internal combustion vehicles in an EV format. Below are just some of the expected vehicles coming to the SUV/truck EV market:\n\nGM Hummer – 2021\nBollinger B2 – 2021/2022\nFord Lightning – 2022\nChevy Silverado EV – 2023\nGMC Sierra EV – 2023\nTesla Cybertruck – 2022/2023\nCanoo Pickup – 2023\nRam 1500 Electric – 2024\n\nAnd Vans are Increasingly Competitive Too\nCompetition will be fierce in the EV delivery van market as well, as manufacturers providing last-mile delivery trucks and vans look to maintain existing business with new EV platforms. Below are just some of the many delivery vans in production or scheduled for production.\n\nFiat e-Ducato – already on sale in Europe\nNissan e-NV200 – already on sale in Europe\nFord E Transit – 2022\nBrightDrop EV600 – new GM brand for EV vans – 2022\nWorkhorse C1000 – 2022\nMercedes E Sprinter -already on sale in Europe – late 2023/early 2024 to US\n\nPartnerships Look Overhyped\nMany investors may get excited about Rivian’s partnerships with well-known companies like Amazonand Ford. However, when we dig into the details of these partnerships, they’re filled with hype and not much else.\nAmazon:In 2019 Rivianannounceda partnership with Amazon Logistics Inc., (referred to in theS-1as “Logistics”) a subsidiary of Amazon which is responsible for last-mile delivery of Amazon’s retail operations. While it's reported that Amazon has ordered 100,000electric delivery vehicles (EDVs) from Rivian, under the terms of the agreement Amazon is under no obligation to actually purchase any vehicles. From the S-1:\n“While the EDV Agreement provides that we will be reimbursed for certain development costs, it does not include any minimum purchase requirements or otherwise restrict Logistics from developing vehicles or collaborating with, or purchasing similar vehicles from, third parties.”\nAdditionally, Amazon Logistics has exclusive rights to purchase EDVs from Rivian for four years after the date of first vehicle delivery and a right of first refusal for an additional two years.\nIn other words, Rivian cannot sell EDVs to any other company for four years after delivering its first vehicle to Amazon, whether or not Amazon decides to purchase any EDVs at all. The exclusivity clause of this agreement may significantly hamper Rivian’s ability to capture market share and allow more competitors to enter the EDV market uncontested.\nFord:Rivian also made headlines due to the investments from Ford, which now total nearly $800 million in Class B and D preferred stock. In 2019, Rivian entered into a purchase agreement with a Ford subsidiary, Troy Design and Manufacturing Co (referred to as TDM), for the supply of prototype and pre-production vehicles. Now that Rivian’s factory is up and running, it expects to discontinue purchases for this service from TDM.\nHowever, Rivian is still required to purchase certain key components for its R1 vehicle program exclusively from TDM for the life of the R1 vehicle program. Details on the rest of the partnership are unclear. Ford already cancelled plans to build a Lincoln EV based on Rivian’s platform in2020, stating that “it would be better to focus our development efforts on Lincoln’s own fully electric vehicle.” More recently, Ford executives left Rivian’s board of directors and Ford noted in astatementthat “Rivian is a strategic investment and we're still exploring ways for potential collaboration with them. We don't have anything to announce today.”\nWhile these partnerships were touted as legitimizing Rivian’s business, in reality, they look more like arms-length equity investments by Amazon and Ford. In its latest 10-Q, Amazon reported a 20% ownership interest in Rivian. In many respects, these partnerships hinder Rivian’s growth and cost model more than they help the company.\nLimited Addressable Market: Unable to Sell Cars in 28 States\nAs of Sept. 30, 2021, Rivian is only allowed to sell its cars in 22 states and the District of Columbia, or less than half of the United States. In the other 28 states, which include the likes of New York, Texas, and New Jersey, Rivian is restricted from obtaining a dealer license to sell within the state (see page 148 of theS-1). While Rivian has shown that it can convince states to allow them to apply for a dealer’s license, it will be a long and expensive process to lobby each state individually.\nAnd Getting Service Could be Troublesome\nWhen it comes to fixing/repairing traditional vehicles, there are any number of options, from DIY, dealers, or auto shops. However, EVs require different repairs and getting service for a Rivian vehicle looks increasingly difficult.\nEight states outright prohibit Rivian from owning or operating a service center providing warranty service (see page 148 of theS-1). While Rivian does have a plan to address these eight states, the solution is certainly not ideal for customers. Rivian has mobile service units which can be sent from neighboring states to reach customers in prohibited areas, and the company will offer towing services for broken cars to a state with a service location.\nHowever, as of today, Rivian has only six service centers in four states and only 11 mobile service vehicles (see page 3 of theS-1). For reference, Tesla has nearly 600 store and service locations and a mobile service fleet of nearly 1,100. GM, Ford, and Stellantis have a combined 9,600 dealerships throughout the United States.\nRivian will need to spend significant capital, i.e. burn more cash, to build out a meaningful service network, or else it could see its service centers overfilled with a backlog of repairs, as we’ve alreadyseen with Tesla, which could damage demand.\nStupid Money Risk Looks Low\nGiven the multi-billion-dollar investments planned by the incumbents, we believe It's highly unlikely that Rivian will be acquired at its lofty expected valuation. Without delivering more than 200 vehicles, Rivian, at the midpoint of its IPO price range, already has a higher market cap than Honda and Nissan, and nearing Stellantis and BMW.\nGiven that each of the competitors has its own manufacturing plants and existing vehicle platforms to leverage and build EVs, an acquisition of Rivian would be an extremely poor use of capital. Any acquirer would essentially be paying a massive premium to purchase the Rivian brand, which is still unproven in the auto market. It would be more cost effective for potential acquirers to compete with Rivian instead of acquiring them.\nOther Red Flags for Investors\nWith a lofty valuation that implies likely unrealistic improvement in both revenue, profits, and market share, investors should be aware that Rivian’s S-1 also includes these other red flags.\nInsiders Have Majority Control: Rivian will have multiple classes of common stock, with class A shares sold to the public and class B shares reserved for the founder and affiliates. Rivian discloses in its S-1 that Class A shares will have one vote per share and Class B shares will have 10 votes per share. After the completion of the IPO, the founder and early investors will hold 69% of the voting rights in the company. Amazon alone will hold 17% of the voting power.\nIn other words, despite new investors paying a premium to buy the IPO and provide capital to the company, Rivian’s insiders and other owners will continue to control the company, and new shareholders will have little to no control over corporate governance.\nNo Non-GAAP Metrics, Yet: Many unprofitable companies present non-GAAP metrics to appear more profitable than they really are. However, Rivian discloses no non-GAAP metrics in its entire S-1. However, investors need to be aware that should such disclosure practice change, there is always a risk that non-GAAP metrics could be used to manipulate earnings going forward.\nWe Don’t Know If We Can Trust the Financials:Investors should take Rivian’s reported numbers with a grain of salt because the company identified a material weakness in its internal control over financial reporting. Specifically, the company identified a deficiency related to “controls to address segregation of duties across financially relevant functions and information technology general controls over tools and applications used in financial reporting.” As an emerging growth company, Rivian is not required to have an independent auditor provide an opinion on internal controls, so we’re glad the company chose to disclose this information.\nHowever, the company makes no assurances that the issues have been fixed, nor that it has identified all existing material weaknesses. From the S-1:\n“We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time… accordingly, we cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses.”\nWeaknesses in internal controls increase the risk that the company’s financials are fraudulent and/or misleading.\nEmerging Growth Status Limits Transparency: By electing to operate as an “Emerging Growth Company,” Rivian is exempt from certain requirements that are beneficial to shareholders. For instance, and as noted above the SEC does not currently require Rivian to have an independent auditor provide an opinion on internal controls. Additionally, Rivian is not required to provide information on executive compensation structure and can delay adoption of certain accounting procedures, which limit the transparency of its financial statements.\nCritical Details Found in Financial Filings By OurRobo-Analyst Technology\nBelow are specifics on the adjustments we make based on Robo-Analyst findings in Rivian’s S-1:\nIncome Statement: We made $57 million in adjustments, with a net effect of removing $35 million in non-operating expenses. You can see all the adjustments made to Rivian’s income statementhere.\nBalance Sheet:Wemade $781 million in adjustments to calculate invested capital, with a net effect of decreasing invested capital by $725 million. The most notable adjustment was $3 million in operating leases. This adjustment represented <1% of reported net assets. You can see all the adjustments made to Rivian’s balance sheethere.\nValuation:Wemade $5.4 billion in adjustments to shareholder value, all of which decreased shareholder value. The largest adjustment to shareholder value was $5.2 billion in preferred capital. This adjustment represents 10% of the midpoint of Rivian’s IPO valuation. You can see all the adjustments made to Rivian’s valuationhere.\nThis article originally published onNov. 3, 2021.\nDisclosure: David Trainer, Kyle Guske II, Alex Sword, and Matt Shuler receive no compensation to write about any specific stock, style, or theme.","news_type":1},"isVote":1,"tweetType":1,"viewCount":617,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":844780603,"gmtCreate":1636460244186,"gmtModify":1636460244259,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"This is a sobering review on Rivian. Whilst the bells and whistles of buying&nbsp;Rivian's shares at IPO is so enticingly magnetic, I urge anyone to just read this before you make any buy decision. Everykey selling point of Rivian is debunked and justified by the writer... and rightly so. I&nbsp;have and I am having second thought on Rivian. Instead I will wait for F to dip and buy in.","listText":"This is a sobering review on Rivian. Whilst the bells and whistles of buying&nbsp;Rivian's shares at IPO is so enticingly magnetic, I urge anyone to just read this before you make any buy decision. Everykey selling point of Rivian is debunked and justified by the writer... and rightly so. I&nbsp;have and I am having second thought on Rivian. Instead I will wait for F to dip and buy in.","text":"This is a sobering review on Rivian. Whilst the bells and whistles of buying Rivian's shares at IPO is so enticingly magnetic, I urge anyone to just read this before you make any buy decision. Everykey selling point of Rivian is debunked and justified by the writer... and rightly so. I have and I am having second thought on Rivian. Instead I will wait for F to dip and buy in.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":1,"link":"https://laohu8.com/post/844780603","repostId":"1174798558","repostType":2,"repost":{"id":"1174798558","kind":"news","pubTimestamp":1636447138,"share":"https://www.laohu8.com/m/news/1174798558?lang=&edition=full","pubTime":"2021-11-09 16:38","market":"us","language":"en","title":"Rivian: Even At A Lowered Valuation, Don't Buy This IPO","url":"https://stock-news.laohu8.com/highlight/detail?id=1174798558","media":"seeking alpha","summary":"Summary\n\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we t","content":"<p>Summary</p>\n<ul>\n <li>Despite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we think investors should avoid the temptation to buy Rivian shares.</li>\n <li>Rivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Tesla vehicles produced during the past 12 months.</li>\n <li>These manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.</li>\n <li>Looking for more investing ideas like this one? Get them exclusively at Value Investing 2.0 .</li>\n</ul>\n<p>Rivian (RIVN)is set to IPO next week with an expected valuation of ~$52 billion, the midpoint of its IPO price range. A $52 billion valuation is well below the $80 billion valuation the company originally sought, but it's still too high.</p>\n<p>Despite the popularity of the electric vehicle market and huge gains in Tesla’s (TSLA) stock, we think investors should avoid the temptation to buy Rivian shares.</p>\n<p>We're skeptical that Rivian’s IPO will deliver for investors even with the lower valuation. Investors shouldn’t buy a stock just because it’s in a hot sector.</p>\n<p>Rivian has yet to manufacture a meaningful number of vehicles and competes with well-capitalized electric vehicle upstarts as well as incumbents like General Motors (GM) and BMW, which both have decades of experience and multi-billion dollar plans to expand EV production.</p>\n<p>Rivian’s $52 billion valuation is about the same as Honda (HMC), which has world-class manufacturing capabilities and is investing heavily in a suite of electric vehicles. It makes no sense for Rivian to IPO with a valuation anywhere near Honda. Maybe, after several years of production and sales on par with Honda, Rivian would deserve a comparable valuation. But, to buy the stock at such a high price before the company has shown it can consistently produce more than a handful of cars seems ridiculous to us.</p>\n<p>Rivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Teslavehicles produced over the past 12 months and 66% more vehicles than Honda sold in the U.S. in 2020.</p>\n<p>These manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.</p>\n<p>Investments from Amazon(NASDAQ:AMZN)and Ford(NYSE:F)do nothing to justify the IPO valuation. Those investments were made at much lower prices and simply position these companies to participate in what appears to be a very lucrative IPO for private investors and owners.</p>\n<p>We believe the stock is worth $13 billion at best – a 75% downside to the midpoint IPO valuation of $52 billion.</p>\n<p>Below, we’ll outline the impracticality of Rivian meeting the expectations baked into the expected IPO valuation.</p>\n<p><b>$52 Billion Valuation Makes No Sense</b></p>\n<p>At its expected valuation of ~$52 billion, Rivian would be valued on par with Honda, a manufacturer that produced more than 4.5 million vehicles worldwide in fiscal 2021, and nearing Stellantis, BMW, and more. See Figure 1. At $1.2 trillion, Tesla’smarket cap is off the chart and is therefore excluded from Figure 1.</p>\n<p><b>Figure 1: Rivian’s Expected Valuation Compared to Competition</b></p>\n<p>Sources: New Constructs, LLC and company filings</p>\n<p><b>At Least Tesla Sold Vehicles Prior to IPO</b></p>\n<p>With no revenue from actual vehicle sales, investors need to understand that Rivian is in its infancy. Unsurprisingly,Core Earningswere -$398 million in 2019 and -$982 million in 2020 and the company burned -$2.5 billion in free cash flow (FCF) in 2020. In other words, the company looks more like a startup than one ready for an IPO. When Tesla went public in 2010 at a valuation of ~$1.7 billion, it was already delivering vehicles, and by the end of 2010, delivered over 1,500 units.</p>\n<p><b>Valuation Implies Rivian Will Take Huge Share of the Global EV Market</b></p>\n<p>With less than 200 deliveries of its R1T vehicle, Rivian doesn’t have significant sales to generate a meaningful average selling pricefor its vehicles. However, if we optimistically assume the starting price of $70,000 for its R1S as its ASP, Rivian’s expected valuation implies the company will sell 1.1 million vehicles in 2030, or 4% of theprojected global EV passenger vehicle marketin 2030.</p>\n<p>Meanwhile, Bloombergreportsthat Rivian is gearing up for production of upwards of 300,000 units, or just one-fourth the production implied by its expected IPO valuation. We think it's unlikely that Rivian will sell such a high volume of vehicles at a $70,000 ASP, and the implied vehicle sales based on lower ASPs look even more impractical.</p>\n<p>Per Figure 2, Rivian’s midpoint IPO valuation implies that, in 2030, it will sell the following number of vehicles based on different ASPs:</p>\n<ul>\n <li>1.1 million vehicles – ASP of $70k (starting price of Rivian’s R1S)</li>\n <li>1.5 million vehicles – ASP of $51k (equal to Tesla over TTM)</li>\n <li>2.0 million vehicles – ASP of $38k (average new car price in the U.S. in 2020)</li>\n <li>4.4 million vehicles – ASP of $17k (equal to General Motors over the TTM)</li>\n</ul>\n<p>If Rivian achieves those EV sales, the implied market share for the company would be the following (assuming global passenger EV sales reach 25.8 million in 2030, thebase case projection from the IEA):</p>\n<ul>\n <li>4% for 1.1 million vehicles</li>\n <li>6% for 1.5 million vehicles</li>\n <li>8% for 2.0 million vehicles</li>\n <li>17% for 4.4 million vehicles</li>\n</ul>\n<p><b>Figure 2: Implied Vehicle Sales in 2030 to Justify Expected Valuation</b></p>\n<p>Sources: New Constructs, LLC and company filings</p>\n<p>Buying stock in any company at a price that implies such huge market share gain is ill-advised, in our opinion.</p>\n<p><b>Doing the Math: $52 Billion Valuation Is Beyond Overvalued</b></p>\n<p>We use our reverse discounted cash flow model to provide more clarity, mathematical evidence that the expected IPO valuation is too high and offers unattractive risk/reward.</p>\n<p>In order to justify the midpoint of its IPO price range, Rivian must:</p>\n<ul>\n <li>Immediately achieve a 6% NOPAT margin (slightly below Tesla’s TTM margin) and</li>\n <li>grow revenue to $74 billion by 2030 (over 1.5x Tesla’s TTM revenue).</li>\n</ul>\n<p>In thisscenario, Rivian would generate $74 billion in revenue in fiscal 2030, which is 57% and 55% of General Motors’and Ford’sTTM revenue. This implied revenue is also used to calculate the implied vehicle sales in Figure 2 above, which are so high they warrant repeating. At an ASP of $70k, this scenario implies Rivian sells ~1.1 million vehicles in 2030, or 4% of the forecasted global EV passenger vehicle market in 2030. For reference, Honda sold 1.2 million vehicles in the U.S. in 2020.</p>\n<p><b>DCF Scenario 2: Growth at 5x Industry Expectations Equals 75% Downside</b></p>\n<p>We review an additional DCF scenario to highlight the downside risk even if Rivian’s revenue grows five times the expected industry growth rate.</p>\n<p>If we assume Rivian:</p>\n<ul>\n <li>immediately achieves a NOPAT margin of 6% and</li>\n <li>grows revenue to $25 billion by 2030, then</li>\n</ul>\n<p>RIVN is worth just $13 billion today – a 75% downside to the midpoint IPO valuation.See the math behind this reverse DCF scenario. In this scenario, Rivian would generate $24.7 billion in revenue in 2030, which is equal to Tesla’s 2019 revenue. At an ASP of $38k, the average new car price in the U.S. in 2020, this scenario implies Rivian sells 650,000vehicles in 2030, which is 110% of the number of Chevrolet Silverado’s sold in 2020 and 83% of the F-150s sold in 2020. For reference, this level of production is also 4x the maximum production capacity of the company’s Normal Factory.</p>\n<p>Based on our reverse DCF model, if the company cannot achieve at least five times the expected industry growth rate, the downside could be as much as 100%.</p>\n<p>Figure 3 compares Rivian’s historical NOPAT to the NOPAT implied by each of the above DCF scenarios. For additional context, we show Tesla’s, Stellantis’ and Ford’s TTM NOPAT. Notably, Honda’s TTM NOPAT, at $6.2 billion, is literally off the chart and is, therefore, excluded from Figure 3.</p>\n<p><b>Figure 3: Rivian’s IPO Valuation is Unreasonably High</b></p>\n<p>Sources: New Constructs, LLC and company filings</p>\n<p>Both of the above scenarios also assume Rivian grows revenue, NOPAT, and FCF without increasing working capital or fixed assets. This assumption is highly unlikely, especially given Rivian will need additional manufacturing plants to reach the production levels implied by its valuation, but allows us to create best-case scenarios that demonstrate the level of expectations embedded in the current valuation.</p>\n<p><b>Roadblocks to Justifying Rivian’s High Valuation</b></p>\n<p>Below, we present a few of the many challenges Rivian faces as it attempts to meet the expectations implied by its expected IPO valuation.</p>\n<p><b>Incumbents Are Coming for the EV Crown</b></p>\n<p>Incumbent automakers are highly profitable and generate billions in free cash flow by leveraging scale and manufacturing expertise. The advantages that incumbents have accumulated in the traditional auto market make their transition to the EV market easier than new entrants like Rivian and Tesla.</p>\n<p>We know from Tesla’s early days (filled with setbacks and delays) that it takes years to develop scale and manufacturing capabilities to routinely deliver a large number of quality vehicles on time. Rivian, despite investments from Ford that could help alleviate some early growing pains,already has delayed deliveryof its flagship vehicles. Any further delays could make some of the company’s pre-ordering customers, which total ~54,000 as of Oct. 31 for its passenger vehicles, look elsewhere. For comparison, Ford announced in October 2021 that it had over 160,000 reservations for its F-150 Lightning.</p>\n<p>In actual manufacturing, and not pre-orders, Ford, Volkswagen, General Motors, and on a smaller level Tesla, have already developed the necessary infrastructure to deliver vehicles at scale. Now, these incumbents are plowing headfirst with ample capital into the EV market, which diminishes Rivian’s ability to take market share. For example:</p>\n<ul>\n <li>Ford, which already introduced its Mustang Mach-E and F-150 Lightning, is increasing EV investments to$30 billionthrough 2025, andrecently announcedmulti-billion dollar battery and EV plants in Tennessee and Kentucky. As recently as May 2021, Ford projects that 40% of its sales, or 2.2 million units based on 2019 (pre-pandemic) sales, will be fully electric by 2030. This level of production would account for 9% of the International Energy Agency’s (IEA)base forecastfor EV sales in 2030.</li>\n <li>Volkswagen, Europe’s largest automaker, plans to invest almost $180 billion into EVs through 2025 and projects that50% of its global saleswill be fully electric by 2030, which would equate to 5.5 million vehicles based on 2019 sales. This number of vehicles would account for 21% of IEA’s base forecast for EV sales in 2030.</li>\n <li>General Motors plans to increase its investment into EVs to$35 billionthrough 2025 and plans to unveil an electric version of its Chevy Silverado in January 2022. General Motors is targeting EV sales of “more than 1 million” by 2025 which would give the company an 8% share of the EV market based on IEA’s base case for 2025.</li>\n <li>Tesla, the current world leader in EV sales, delivered more than 800,000 vehicles through the first three quarters of 2021 and isexpectedto deliver 1.3 million units in 2022. Despite delays, the company plans to introduce its Cybertruck and is in the process of building additional manufacturing plants.</li>\n <li>Stellantis, parent company of Dodge, Jeep, and Ram, recentlyannounceda partnership with LG to procure battery cells in North America and has noted its goals include having a zero-emission vehicle in every SUV segment by 2025.</li>\n</ul>\n<p>Ford, Volkswagen, and General Motors alone are planning to spend at least $245 billion through 2025 and produce nearly 9 million EVs by 2030. These numbers don’t include what other incumbents (Volvo, Honda, Jaguar Land Rover, Porsche, Mercedes, BMW, and more), and other new entrants (NIO, Lucid Motors, Lordstown Motors, and more) will contribute.</p>\n<p>Given that Rivian has not delivered a single vehicle to date, it is clearly chasing the competition at this point, and the competition has billions of dollars to spend to win the race.</p>\n<p><b>Incumbents Have Big Plans for SUVs and Trucks</b></p>\n<p>The incumbent manufacturers aren’t just throwing money at general EV goals or targets either. In fact, they’ve laid out clear plans to provide some of the most popular internal combustion vehicles in an EV format. Below are just some of the expected vehicles coming to the SUV/truck EV market:</p>\n<ul>\n <li>GM Hummer – 2021</li>\n <li>Bollinger B2 – 2021/2022</li>\n <li>Ford Lightning – 2022</li>\n <li>Chevy Silverado EV – 2023</li>\n <li>GMC Sierra EV – 2023</li>\n <li>Tesla Cybertruck – 2022/2023</li>\n <li>Canoo Pickup – 2023</li>\n <li>Ram 1500 Electric – 2024</li>\n</ul>\n<p><b>And Vans are Increasingly Competitive Too</b></p>\n<p>Competition will be fierce in the EV delivery van market as well, as manufacturers providing last-mile delivery trucks and vans look to maintain existing business with new EV platforms. Below are just some of the many delivery vans in production or scheduled for production.</p>\n<ul>\n <li>Fiat e-Ducato – already on sale in Europe</li>\n <li>Nissan e-NV200 – already on sale in Europe</li>\n <li>Ford E Transit – 2022</li>\n <li>BrightDrop EV600 – new GM brand for EV vans – 2022</li>\n <li>Workhorse C1000 – 2022</li>\n <li>Mercedes E Sprinter -already on sale in Europe – late 2023/early 2024 to US</li>\n</ul>\n<p><b>Partnerships Look Overhyped</b></p>\n<p>Many investors may get excited about Rivian’s partnerships with well-known companies like Amazonand Ford. However, when we dig into the details of these partnerships, they’re filled with hype and not much else.</p>\n<p><b>Amazon:</b>In 2019 Rivianannounceda partnership with Amazon Logistics Inc., (referred to in theS-1as “Logistics”) a subsidiary of Amazon which is responsible for last-mile delivery of Amazon’s retail operations. While it's reported that Amazon has ordered 100,000electric delivery vehicles (EDVs) from Rivian, under the terms of the agreement Amazon is under no obligation to actually purchase any vehicles. From the S-1:</p>\n<p>“While the EDV Agreement provides that we will be reimbursed for certain development costs, it does not include any minimum purchase requirements or otherwise restrict Logistics from developing vehicles or collaborating with, or purchasing similar vehicles from, third parties.”</p>\n<p>Additionally, Amazon Logistics has exclusive rights to purchase EDVs from Rivian for four years after the date of first vehicle delivery and a right of first refusal for an additional two years.</p>\n<p>In other words, Rivian cannot sell EDVs to any other company for four years after delivering its first vehicle to Amazon, whether or not Amazon decides to purchase any EDVs at all. The exclusivity clause of this agreement may significantly hamper Rivian’s ability to capture market share and allow more competitors to enter the EDV market uncontested.</p>\n<p><b>Ford:</b>Rivian also made headlines due to the investments from Ford, which now total nearly $800 million in Class B and D preferred stock. In 2019, Rivian entered into a purchase agreement with a Ford subsidiary, Troy Design and Manufacturing Co (referred to as TDM), for the supply of prototype and pre-production vehicles. Now that Rivian’s factory is up and running, it expects to discontinue purchases for this service from TDM.</p>\n<p>However, Rivian is still required to purchase certain key components for its R1 vehicle program exclusively from TDM for the life of the R1 vehicle program. Details on the rest of the partnership are unclear. Ford already cancelled plans to build a Lincoln EV based on Rivian’s platform in2020, stating that “it would be better to focus our development efforts on Lincoln’s own fully electric vehicle.” More recently, Ford executives left Rivian’s board of directors and Ford noted in astatementthat “Rivian is a strategic investment and we're still exploring ways for potential collaboration with them. We don't have anything to announce today.”</p>\n<p>While these partnerships were touted as legitimizing Rivian’s business, in reality, they look more like arms-length equity investments by Amazon and Ford. In its latest 10-Q, Amazon reported a 20% ownership interest in Rivian. In many respects, these partnerships hinder Rivian’s growth and cost model more than they help the company.</p>\n<p><b>Limited Addressable Market: Unable to Sell Cars in 28 States</b></p>\n<p>As of Sept. 30, 2021, Rivian is only allowed to sell its cars in 22 states and the District of Columbia, or less than half of the United States. In the other 28 states, which include the likes of New York, Texas, and New Jersey, Rivian is restricted from obtaining a dealer license to sell within the state (see page 148 of theS-1). While Rivian has shown that it can convince states to allow them to apply for a dealer’s license, it will be a long and expensive process to lobby each state individually.</p>\n<p><b>And Getting Service Could be Troublesome</b></p>\n<p>When it comes to fixing/repairing traditional vehicles, there are any number of options, from DIY, dealers, or auto shops. However, EVs require different repairs and getting service for a Rivian vehicle looks increasingly difficult.</p>\n<p>Eight states outright prohibit Rivian from owning or operating a service center providing warranty service (see page 148 of theS-1). While Rivian does have a plan to address these eight states, the solution is certainly not ideal for customers. Rivian has mobile service units which can be sent from neighboring states to reach customers in prohibited areas, and the company will offer towing services for broken cars to a state with a service location.</p>\n<p>However, as of today, Rivian has only six service centers in four states and only 11 mobile service vehicles (see page 3 of theS-1). For reference, Tesla has nearly 600 store and service locations and a mobile service fleet of nearly 1,100. GM, Ford, and Stellantis have a combined 9,600 dealerships throughout the United States.</p>\n<p>Rivian will need to spend significant capital, i.e. burn more cash, to build out a meaningful service network, or else it could see its service centers overfilled with a backlog of repairs, as we’ve alreadyseen with Tesla, which could damage demand.</p>\n<p><b>Stupid Money Risk Looks Low</b></p>\n<p>Given the multi-billion-dollar investments planned by the incumbents, we believe It's highly unlikely that Rivian will be acquired at its lofty expected valuation. Without delivering more than 200 vehicles, Rivian, at the midpoint of its IPO price range, already has a higher market cap than Honda and Nissan, and nearing Stellantis and BMW.</p>\n<p>Given that each of the competitors has its own manufacturing plants and existing vehicle platforms to leverage and build EVs, an acquisition of Rivian would be an extremely poor use of capital. Any acquirer would essentially be paying a massive premium to purchase the Rivian brand, which is still unproven in the auto market. It would be more cost effective for potential acquirers to compete with Rivian instead of acquiring them.</p>\n<p><b>Other Red Flags for Investors</b></p>\n<p>With a lofty valuation that implies likely unrealistic improvement in both revenue, profits, and market share, investors should be aware that Rivian’s S-1 also includes these other red flags.</p>\n<p><b>Insiders Have Majority Control</b>: Rivian will have multiple classes of common stock, with class A shares sold to the public and class B shares reserved for the founder and affiliates. Rivian discloses in its S-1 that Class A shares will have one vote per share and Class B shares will have 10 votes per share. After the completion of the IPO, the founder and early investors will hold 69% of the voting rights in the company. Amazon alone will hold 17% of the voting power.</p>\n<p>In other words, despite new investors paying a premium to buy the IPO and provide capital to the company, Rivian’s insiders and other owners will continue to control the company, and new shareholders will have little to no control over corporate governance.</p>\n<p><b>No Non-GAAP Metrics, Yet</b>: Many unprofitable companies present non-GAAP metrics to appear more profitable than they really are. However, Rivian discloses no non-GAAP metrics in its entire S-1. However, investors need to be aware that should such disclosure practice change, there is always a risk that non-GAAP metrics could be used to manipulate earnings going forward.</p>\n<p><b>We Don’t Know If We Can Trust the Financials:</b>Investors should take Rivian’s reported numbers with a grain of salt because the company identified a material weakness in its internal control over financial reporting. Specifically, the company identified a deficiency related to “controls to address segregation of duties across financially relevant functions and information technology general controls over tools and applications used in financial reporting.” As an emerging growth company, Rivian is not required to have an independent auditor provide an opinion on internal controls, so we’re glad the company chose to disclose this information.</p>\n<p>However, the company makes no assurances that the issues have been fixed, nor that it has identified all existing material weaknesses. From the S-1:</p>\n<p>“We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time… accordingly, we cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses.”</p>\n<p>Weaknesses in internal controls increase the risk that the company’s financials are fraudulent and/or misleading.</p>\n<p><b>Emerging Growth Status Limits Transparency</b>: By electing to operate as an “Emerging Growth Company,” Rivian is exempt from certain requirements that are beneficial to shareholders. For instance, and as noted above the SEC does not currently require Rivian to have an independent auditor provide an opinion on internal controls. Additionally, Rivian is not required to provide information on executive compensation structure and can delay adoption of certain accounting procedures, which limit the transparency of its financial statements.</p>\n<p><b>Critical Details Found in Financial Filings By OurRobo-Analyst Technology</b></p>\n<p>Below are specifics on the adjustments we make based on Robo-Analyst findings in Rivian’s S-1:</p>\n<p>Income Statement: We made $57 million in adjustments, with a net effect of removing $35 million in non-operating expenses. You can see all the adjustments made to Rivian’s income statementhere.</p>\n<p>Balance Sheet:Wemade $781 million in adjustments to calculate invested capital, with a net effect of decreasing invested capital by $725 million. The most notable adjustment was $3 million in operating leases. This adjustment represented &lt;1% of reported net assets. You can see all the adjustments made to Rivian’s balance sheethere.</p>\n<p>Valuation:Wemade $5.4 billion in adjustments to shareholder value, all of which decreased shareholder value. The largest adjustment to shareholder value was $5.2 billion in preferred capital. This adjustment represents 10% of the midpoint of Rivian’s IPO valuation. You can see all the adjustments made to Rivian’s valuationhere.</p>\n<p><i>This article originally published onNov. 3, 2021.</i></p>\n<p><i>Disclosure: David Trainer, Kyle Guske II, Alex Sword, and Matt Shuler receive no compensation to write about any specific stock, style, or theme.</i></p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Rivian: Even At A Lowered Valuation, Don't Buy This IPO</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nRivian: Even At A Lowered Valuation, Don't Buy This IPO\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-09 16:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4466233-even-at-a-lowered-valuation-dont-buy-rivians-ipo><strong>seeking alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we think investors should avoid the temptation to buy Rivian shares.\nRivian’s $52 billion valuation ...</p>\n\n<a href=\"https://seekingalpha.com/article/4466233-even-at-a-lowered-valuation-dont-buy-rivians-ipo\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"RIVN":"Rivian Automotive, Inc."},"source_url":"https://seekingalpha.com/article/4466233-even-at-a-lowered-valuation-dont-buy-rivians-ipo","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1174798558","content_text":"Summary\n\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we think investors should avoid the temptation to buy Rivian shares.\nRivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Tesla vehicles produced during the past 12 months.\nThese manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.\nLooking for more investing ideas like this one? Get them exclusively at Value Investing 2.0 .\n\nRivian (RIVN)is set to IPO next week with an expected valuation of ~$52 billion, the midpoint of its IPO price range. A $52 billion valuation is well below the $80 billion valuation the company originally sought, but it's still too high.\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s (TSLA) stock, we think investors should avoid the temptation to buy Rivian shares.\nWe're skeptical that Rivian’s IPO will deliver for investors even with the lower valuation. Investors shouldn’t buy a stock just because it’s in a hot sector.\nRivian has yet to manufacture a meaningful number of vehicles and competes with well-capitalized electric vehicle upstarts as well as incumbents like General Motors (GM) and BMW, which both have decades of experience and multi-billion dollar plans to expand EV production.\nRivian’s $52 billion valuation is about the same as Honda (HMC), which has world-class manufacturing capabilities and is investing heavily in a suite of electric vehicles. It makes no sense for Rivian to IPO with a valuation anywhere near Honda. Maybe, after several years of production and sales on par with Honda, Rivian would deserve a comparable valuation. But, to buy the stock at such a high price before the company has shown it can consistently produce more than a handful of cars seems ridiculous to us.\nRivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Teslavehicles produced over the past 12 months and 66% more vehicles than Honda sold in the U.S. in 2020.\nThese manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.\nInvestments from Amazon(NASDAQ:AMZN)and Ford(NYSE:F)do nothing to justify the IPO valuation. Those investments were made at much lower prices and simply position these companies to participate in what appears to be a very lucrative IPO for private investors and owners.\nWe believe the stock is worth $13 billion at best – a 75% downside to the midpoint IPO valuation of $52 billion.\nBelow, we’ll outline the impracticality of Rivian meeting the expectations baked into the expected IPO valuation.\n$52 Billion Valuation Makes No Sense\nAt its expected valuation of ~$52 billion, Rivian would be valued on par with Honda, a manufacturer that produced more than 4.5 million vehicles worldwide in fiscal 2021, and nearing Stellantis, BMW, and more. See Figure 1. At $1.2 trillion, Tesla’smarket cap is off the chart and is therefore excluded from Figure 1.\nFigure 1: Rivian’s Expected Valuation Compared to Competition\nSources: New Constructs, LLC and company filings\nAt Least Tesla Sold Vehicles Prior to IPO\nWith no revenue from actual vehicle sales, investors need to understand that Rivian is in its infancy. Unsurprisingly,Core Earningswere -$398 million in 2019 and -$982 million in 2020 and the company burned -$2.5 billion in free cash flow (FCF) in 2020. In other words, the company looks more like a startup than one ready for an IPO. When Tesla went public in 2010 at a valuation of ~$1.7 billion, it was already delivering vehicles, and by the end of 2010, delivered over 1,500 units.\nValuation Implies Rivian Will Take Huge Share of the Global EV Market\nWith less than 200 deliveries of its R1T vehicle, Rivian doesn’t have significant sales to generate a meaningful average selling pricefor its vehicles. However, if we optimistically assume the starting price of $70,000 for its R1S as its ASP, Rivian’s expected valuation implies the company will sell 1.1 million vehicles in 2030, or 4% of theprojected global EV passenger vehicle marketin 2030.\nMeanwhile, Bloombergreportsthat Rivian is gearing up for production of upwards of 300,000 units, or just one-fourth the production implied by its expected IPO valuation. We think it's unlikely that Rivian will sell such a high volume of vehicles at a $70,000 ASP, and the implied vehicle sales based on lower ASPs look even more impractical.\nPer Figure 2, Rivian’s midpoint IPO valuation implies that, in 2030, it will sell the following number of vehicles based on different ASPs:\n\n1.1 million vehicles – ASP of $70k (starting price of Rivian’s R1S)\n1.5 million vehicles – ASP of $51k (equal to Tesla over TTM)\n2.0 million vehicles – ASP of $38k (average new car price in the U.S. in 2020)\n4.4 million vehicles – ASP of $17k (equal to General Motors over the TTM)\n\nIf Rivian achieves those EV sales, the implied market share for the company would be the following (assuming global passenger EV sales reach 25.8 million in 2030, thebase case projection from the IEA):\n\n4% for 1.1 million vehicles\n6% for 1.5 million vehicles\n8% for 2.0 million vehicles\n17% for 4.4 million vehicles\n\nFigure 2: Implied Vehicle Sales in 2030 to Justify Expected Valuation\nSources: New Constructs, LLC and company filings\nBuying stock in any company at a price that implies such huge market share gain is ill-advised, in our opinion.\nDoing the Math: $52 Billion Valuation Is Beyond Overvalued\nWe use our reverse discounted cash flow model to provide more clarity, mathematical evidence that the expected IPO valuation is too high and offers unattractive risk/reward.\nIn order to justify the midpoint of its IPO price range, Rivian must:\n\nImmediately achieve a 6% NOPAT margin (slightly below Tesla’s TTM margin) and\ngrow revenue to $74 billion by 2030 (over 1.5x Tesla’s TTM revenue).\n\nIn thisscenario, Rivian would generate $74 billion in revenue in fiscal 2030, which is 57% and 55% of General Motors’and Ford’sTTM revenue. This implied revenue is also used to calculate the implied vehicle sales in Figure 2 above, which are so high they warrant repeating. At an ASP of $70k, this scenario implies Rivian sells ~1.1 million vehicles in 2030, or 4% of the forecasted global EV passenger vehicle market in 2030. For reference, Honda sold 1.2 million vehicles in the U.S. in 2020.\nDCF Scenario 2: Growth at 5x Industry Expectations Equals 75% Downside\nWe review an additional DCF scenario to highlight the downside risk even if Rivian’s revenue grows five times the expected industry growth rate.\nIf we assume Rivian:\n\nimmediately achieves a NOPAT margin of 6% and\ngrows revenue to $25 billion by 2030, then\n\nRIVN is worth just $13 billion today – a 75% downside to the midpoint IPO valuation.See the math behind this reverse DCF scenario. In this scenario, Rivian would generate $24.7 billion in revenue in 2030, which is equal to Tesla’s 2019 revenue. At an ASP of $38k, the average new car price in the U.S. in 2020, this scenario implies Rivian sells 650,000vehicles in 2030, which is 110% of the number of Chevrolet Silverado’s sold in 2020 and 83% of the F-150s sold in 2020. For reference, this level of production is also 4x the maximum production capacity of the company’s Normal Factory.\nBased on our reverse DCF model, if the company cannot achieve at least five times the expected industry growth rate, the downside could be as much as 100%.\nFigure 3 compares Rivian’s historical NOPAT to the NOPAT implied by each of the above DCF scenarios. For additional context, we show Tesla’s, Stellantis’ and Ford’s TTM NOPAT. Notably, Honda’s TTM NOPAT, at $6.2 billion, is literally off the chart and is, therefore, excluded from Figure 3.\nFigure 3: Rivian’s IPO Valuation is Unreasonably High\nSources: New Constructs, LLC and company filings\nBoth of the above scenarios also assume Rivian grows revenue, NOPAT, and FCF without increasing working capital or fixed assets. This assumption is highly unlikely, especially given Rivian will need additional manufacturing plants to reach the production levels implied by its valuation, but allows us to create best-case scenarios that demonstrate the level of expectations embedded in the current valuation.\nRoadblocks to Justifying Rivian’s High Valuation\nBelow, we present a few of the many challenges Rivian faces as it attempts to meet the expectations implied by its expected IPO valuation.\nIncumbents Are Coming for the EV Crown\nIncumbent automakers are highly profitable and generate billions in free cash flow by leveraging scale and manufacturing expertise. The advantages that incumbents have accumulated in the traditional auto market make their transition to the EV market easier than new entrants like Rivian and Tesla.\nWe know from Tesla’s early days (filled with setbacks and delays) that it takes years to develop scale and manufacturing capabilities to routinely deliver a large number of quality vehicles on time. Rivian, despite investments from Ford that could help alleviate some early growing pains,already has delayed deliveryof its flagship vehicles. Any further delays could make some of the company’s pre-ordering customers, which total ~54,000 as of Oct. 31 for its passenger vehicles, look elsewhere. For comparison, Ford announced in October 2021 that it had over 160,000 reservations for its F-150 Lightning.\nIn actual manufacturing, and not pre-orders, Ford, Volkswagen, General Motors, and on a smaller level Tesla, have already developed the necessary infrastructure to deliver vehicles at scale. Now, these incumbents are plowing headfirst with ample capital into the EV market, which diminishes Rivian’s ability to take market share. For example:\n\nFord, which already introduced its Mustang Mach-E and F-150 Lightning, is increasing EV investments to$30 billionthrough 2025, andrecently announcedmulti-billion dollar battery and EV plants in Tennessee and Kentucky. As recently as May 2021, Ford projects that 40% of its sales, or 2.2 million units based on 2019 (pre-pandemic) sales, will be fully electric by 2030. This level of production would account for 9% of the International Energy Agency’s (IEA)base forecastfor EV sales in 2030.\nVolkswagen, Europe’s largest automaker, plans to invest almost $180 billion into EVs through 2025 and projects that50% of its global saleswill be fully electric by 2030, which would equate to 5.5 million vehicles based on 2019 sales. This number of vehicles would account for 21% of IEA’s base forecast for EV sales in 2030.\nGeneral Motors plans to increase its investment into EVs to$35 billionthrough 2025 and plans to unveil an electric version of its Chevy Silverado in January 2022. General Motors is targeting EV sales of “more than 1 million” by 2025 which would give the company an 8% share of the EV market based on IEA’s base case for 2025.\nTesla, the current world leader in EV sales, delivered more than 800,000 vehicles through the first three quarters of 2021 and isexpectedto deliver 1.3 million units in 2022. Despite delays, the company plans to introduce its Cybertruck and is in the process of building additional manufacturing plants.\nStellantis, parent company of Dodge, Jeep, and Ram, recentlyannounceda partnership with LG to procure battery cells in North America and has noted its goals include having a zero-emission vehicle in every SUV segment by 2025.\n\nFord, Volkswagen, and General Motors alone are planning to spend at least $245 billion through 2025 and produce nearly 9 million EVs by 2030. These numbers don’t include what other incumbents (Volvo, Honda, Jaguar Land Rover, Porsche, Mercedes, BMW, and more), and other new entrants (NIO, Lucid Motors, Lordstown Motors, and more) will contribute.\nGiven that Rivian has not delivered a single vehicle to date, it is clearly chasing the competition at this point, and the competition has billions of dollars to spend to win the race.\nIncumbents Have Big Plans for SUVs and Trucks\nThe incumbent manufacturers aren’t just throwing money at general EV goals or targets either. In fact, they’ve laid out clear plans to provide some of the most popular internal combustion vehicles in an EV format. Below are just some of the expected vehicles coming to the SUV/truck EV market:\n\nGM Hummer – 2021\nBollinger B2 – 2021/2022\nFord Lightning – 2022\nChevy Silverado EV – 2023\nGMC Sierra EV – 2023\nTesla Cybertruck – 2022/2023\nCanoo Pickup – 2023\nRam 1500 Electric – 2024\n\nAnd Vans are Increasingly Competitive Too\nCompetition will be fierce in the EV delivery van market as well, as manufacturers providing last-mile delivery trucks and vans look to maintain existing business with new EV platforms. Below are just some of the many delivery vans in production or scheduled for production.\n\nFiat e-Ducato – already on sale in Europe\nNissan e-NV200 – already on sale in Europe\nFord E Transit – 2022\nBrightDrop EV600 – new GM brand for EV vans – 2022\nWorkhorse C1000 – 2022\nMercedes E Sprinter -already on sale in Europe – late 2023/early 2024 to US\n\nPartnerships Look Overhyped\nMany investors may get excited about Rivian’s partnerships with well-known companies like Amazonand Ford. However, when we dig into the details of these partnerships, they’re filled with hype and not much else.\nAmazon:In 2019 Rivianannounceda partnership with Amazon Logistics Inc., (referred to in theS-1as “Logistics”) a subsidiary of Amazon which is responsible for last-mile delivery of Amazon’s retail operations. While it's reported that Amazon has ordered 100,000electric delivery vehicles (EDVs) from Rivian, under the terms of the agreement Amazon is under no obligation to actually purchase any vehicles. From the S-1:\n“While the EDV Agreement provides that we will be reimbursed for certain development costs, it does not include any minimum purchase requirements or otherwise restrict Logistics from developing vehicles or collaborating with, or purchasing similar vehicles from, third parties.”\nAdditionally, Amazon Logistics has exclusive rights to purchase EDVs from Rivian for four years after the date of first vehicle delivery and a right of first refusal for an additional two years.\nIn other words, Rivian cannot sell EDVs to any other company for four years after delivering its first vehicle to Amazon, whether or not Amazon decides to purchase any EDVs at all. The exclusivity clause of this agreement may significantly hamper Rivian’s ability to capture market share and allow more competitors to enter the EDV market uncontested.\nFord:Rivian also made headlines due to the investments from Ford, which now total nearly $800 million in Class B and D preferred stock. In 2019, Rivian entered into a purchase agreement with a Ford subsidiary, Troy Design and Manufacturing Co (referred to as TDM), for the supply of prototype and pre-production vehicles. Now that Rivian’s factory is up and running, it expects to discontinue purchases for this service from TDM.\nHowever, Rivian is still required to purchase certain key components for its R1 vehicle program exclusively from TDM for the life of the R1 vehicle program. Details on the rest of the partnership are unclear. Ford already cancelled plans to build a Lincoln EV based on Rivian’s platform in2020, stating that “it would be better to focus our development efforts on Lincoln’s own fully electric vehicle.” More recently, Ford executives left Rivian’s board of directors and Ford noted in astatementthat “Rivian is a strategic investment and we're still exploring ways for potential collaboration with them. We don't have anything to announce today.”\nWhile these partnerships were touted as legitimizing Rivian’s business, in reality, they look more like arms-length equity investments by Amazon and Ford. In its latest 10-Q, Amazon reported a 20% ownership interest in Rivian. In many respects, these partnerships hinder Rivian’s growth and cost model more than they help the company.\nLimited Addressable Market: Unable to Sell Cars in 28 States\nAs of Sept. 30, 2021, Rivian is only allowed to sell its cars in 22 states and the District of Columbia, or less than half of the United States. In the other 28 states, which include the likes of New York, Texas, and New Jersey, Rivian is restricted from obtaining a dealer license to sell within the state (see page 148 of theS-1). While Rivian has shown that it can convince states to allow them to apply for a dealer’s license, it will be a long and expensive process to lobby each state individually.\nAnd Getting Service Could be Troublesome\nWhen it comes to fixing/repairing traditional vehicles, there are any number of options, from DIY, dealers, or auto shops. However, EVs require different repairs and getting service for a Rivian vehicle looks increasingly difficult.\nEight states outright prohibit Rivian from owning or operating a service center providing warranty service (see page 148 of theS-1). While Rivian does have a plan to address these eight states, the solution is certainly not ideal for customers. Rivian has mobile service units which can be sent from neighboring states to reach customers in prohibited areas, and the company will offer towing services for broken cars to a state with a service location.\nHowever, as of today, Rivian has only six service centers in four states and only 11 mobile service vehicles (see page 3 of theS-1). For reference, Tesla has nearly 600 store and service locations and a mobile service fleet of nearly 1,100. GM, Ford, and Stellantis have a combined 9,600 dealerships throughout the United States.\nRivian will need to spend significant capital, i.e. burn more cash, to build out a meaningful service network, or else it could see its service centers overfilled with a backlog of repairs, as we’ve alreadyseen with Tesla, which could damage demand.\nStupid Money Risk Looks Low\nGiven the multi-billion-dollar investments planned by the incumbents, we believe It's highly unlikely that Rivian will be acquired at its lofty expected valuation. Without delivering more than 200 vehicles, Rivian, at the midpoint of its IPO price range, already has a higher market cap than Honda and Nissan, and nearing Stellantis and BMW.\nGiven that each of the competitors has its own manufacturing plants and existing vehicle platforms to leverage and build EVs, an acquisition of Rivian would be an extremely poor use of capital. Any acquirer would essentially be paying a massive premium to purchase the Rivian brand, which is still unproven in the auto market. It would be more cost effective for potential acquirers to compete with Rivian instead of acquiring them.\nOther Red Flags for Investors\nWith a lofty valuation that implies likely unrealistic improvement in both revenue, profits, and market share, investors should be aware that Rivian’s S-1 also includes these other red flags.\nInsiders Have Majority Control: Rivian will have multiple classes of common stock, with class A shares sold to the public and class B shares reserved for the founder and affiliates. Rivian discloses in its S-1 that Class A shares will have one vote per share and Class B shares will have 10 votes per share. After the completion of the IPO, the founder and early investors will hold 69% of the voting rights in the company. Amazon alone will hold 17% of the voting power.\nIn other words, despite new investors paying a premium to buy the IPO and provide capital to the company, Rivian’s insiders and other owners will continue to control the company, and new shareholders will have little to no control over corporate governance.\nNo Non-GAAP Metrics, Yet: Many unprofitable companies present non-GAAP metrics to appear more profitable than they really are. However, Rivian discloses no non-GAAP metrics in its entire S-1. However, investors need to be aware that should such disclosure practice change, there is always a risk that non-GAAP metrics could be used to manipulate earnings going forward.\nWe Don’t Know If We Can Trust the Financials:Investors should take Rivian’s reported numbers with a grain of salt because the company identified a material weakness in its internal control over financial reporting. Specifically, the company identified a deficiency related to “controls to address segregation of duties across financially relevant functions and information technology general controls over tools and applications used in financial reporting.” As an emerging growth company, Rivian is not required to have an independent auditor provide an opinion on internal controls, so we’re glad the company chose to disclose this information.\nHowever, the company makes no assurances that the issues have been fixed, nor that it has identified all existing material weaknesses. From the S-1:\n“We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time… accordingly, we cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses.”\nWeaknesses in internal controls increase the risk that the company’s financials are fraudulent and/or misleading.\nEmerging Growth Status Limits Transparency: By electing to operate as an “Emerging Growth Company,” Rivian is exempt from certain requirements that are beneficial to shareholders. For instance, and as noted above the SEC does not currently require Rivian to have an independent auditor provide an opinion on internal controls. Additionally, Rivian is not required to provide information on executive compensation structure and can delay adoption of certain accounting procedures, which limit the transparency of its financial statements.\nCritical Details Found in Financial Filings By OurRobo-Analyst Technology\nBelow are specifics on the adjustments we make based on Robo-Analyst findings in Rivian’s S-1:\nIncome Statement: We made $57 million in adjustments, with a net effect of removing $35 million in non-operating expenses. You can see all the adjustments made to Rivian’s income statementhere.\nBalance Sheet:Wemade $781 million in adjustments to calculate invested capital, with a net effect of decreasing invested capital by $725 million. The most notable adjustment was $3 million in operating leases. This adjustment represented <1% of reported net assets. You can see all the adjustments made to Rivian’s balance sheethere.\nValuation:Wemade $5.4 billion in adjustments to shareholder value, all of which decreased shareholder value. The largest adjustment to shareholder value was $5.2 billion in preferred capital. This adjustment represents 10% of the midpoint of Rivian’s IPO valuation. You can see all the adjustments made to Rivian’s valuationhere.\nThis article originally published onNov. 3, 2021.\nDisclosure: David Trainer, Kyle Guske II, Alex Sword, and Matt Shuler receive no compensation to write about any specific stock, style, or theme.","news_type":1},"isVote":1,"tweetType":1,"viewCount":706,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":842438056,"gmtCreate":1636213899149,"gmtModify":1636213899236,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"Really impressive article and research.&nbsp;[强]&nbsp;","listText":"Really impressive article and research.&nbsp;[强]&nbsp;","text":"Really impressive article and research. [强]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/842438056","repostId":"1171459652","repostType":2,"repost":{"id":"1171459652","kind":"news","pubTimestamp":1636016608,"share":"https://www.laohu8.com/m/news/1171459652?lang=&edition=full","pubTime":"2021-11-04 17:03","market":"us","language":"en","title":"Disney Is A Conviction Buy","url":"https://stock-news.laohu8.com/highlight/detail?id=1171459652","media":"Seeking Alpha","summary":"Summary\n\nDisney today offers the opportunity to invest in a transition story at the relatively early","content":"<p><b>Summary</b></p>\n<ul>\n <li>Disney today offers the opportunity to invest in a transition story at the relatively early stages. Investors today will likely be handsomely rewarded over time.</li>\n <li>Looking at Disney’s valuation with a SOTP method shows significant undervaluation with attractive risk-reward.</li>\n <li>Disney is a conviction buy for me despite the execution risk.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/4f931c901deb3918d74590c419b386ca\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\"><span>EnchantedFairy/iStock Editorial via Getty Images</span></p>\n<p><b>Investment Thesis</b></p>\n<p>Disney’s (DIS) valuation is often misinterpreted, in my opinion. The company is at the early stages of a favorable transformation and will likely deliver results mirroring those of some great companies. Breaking the company into parts and valuing the segments individually is more appropriate than looking at the company as a whole as neither its history nor any other public company is an appropriate comparison. In doing so, I calculate 32% undervaluation with conservative estimates. I also calculate a very unlikely grey sky scenario of a 44% loss and a not-that-unlikely blue sky scenario of 72% gains. I love the risk-reward and am a buyer of the company with conviction despite the relatively high execution risk.</p>\n<p><b>Most Misjudge Disney’s Valuation</b></p>\n<p>A lot of investors overlook the underlying parts of Disney when looking at the company’s valuation. I’ve noticed this reading many SA articles that have neutral and bearish views on the stock. Most authors analyze comparing current multiples to Disney’s history. This method is significantly misleading as Disney is a different company today than it was a few years ago. It makes sense to use historical multiples in finding discounts arising from diversion from the mean with stable businesses. Comparing a changing business to its history is like comparing the multiples of companies with different operations.</p>\n<p>Another thing I thought was wrong was the sales multiple used. Sales multiple only makes sense when comparing very similar companies as the profitability structure and accounting of revenues can change significantly. Even when comparing similar companies, intuition in adjusting premia is common to account for said differences. Comparing Disney’s current P/S to what it was years ago is a futile endeavor in assessing the company’s valuation.</p>\n<p>Furthermore, a certain amount of valuation premium compared to its history is warranted for Disney. Parks and studios make up a significant chunk of Disney earnings and thus valuation and they’ve been negatively affected by the pandemic. Studios had to delay launches due to production cuts and parks had to close down and consumers were afraid to travel to them. Now, with the pent-up demand and with the string of new launches, we should see this trend mean-revert. Revenues and earnings of the coming quarters will be higher than what they were in the pandemic times. Valuation adjusts to this fact which inflates trailing multiples.</p>\n<p><b>Changes in the Business Changes Multiples Permanently</b></p>\n<p>When a company pivots into a new model its multiple will adjust. A favorable pivot will bring a larger multiple and vice versa. I want to provide concrete examples to support my thesis with charts of sales multiples with accompanying price moves. First is the greatest of pivots, Netflix’s (NFLX) ramping of streaming from mailing DVDs. The pioneering trailblazer of streaming’s success is evident in its growing multiples. Next up, Adobe (ADBE) and Autodesk’s (ADSK) cloud transition. Autodesk followed Adobe’s lead in changing its business model from a license-based one to a favorable SaaS model, multiple expansions followed. And I have to mention perhaps the greatest of corporate pivots, the big daddy Microsoft’s switch to cloud and launch of Azure. The big and slow giant achieved an amazing feat and adapted to the age of cloud computing and earned a massive multiple expansion after years of contraction. And last but definitely not least let’s not forget about the store of everything Amazon’s (AMZN) launch of AWS. The company earned a new multiple with its new fast-growing, highly profitable business. The multiples went on to expand for years and years accompanied by a rocketing stock price.</p>\n<p><img src=\"https://static.tigerbbs.com/775122c6392f1e03e128f86a291c3d92\" tg-width=\"640\" tg-height=\"252\" width=\"100%\" height=\"auto\"><img src=\"https://static.tigerbbs.com/239be2347bdb8e8dd8bdcbd50565c612\" tg-width=\"640\" tg-height=\"246\" width=\"100%\" height=\"auto\"><img src=\"https://static.tigerbbs.com/5cb3922bc8f82958e9e2fb52243c8158\" tg-width=\"640\" tg-height=\"248\" width=\"100%\" height=\"auto\"><img src=\"https://static.tigerbbs.com/a282e0a6266ddc51f4586a4df7fc586a\" tg-width=\"640\" tg-height=\"249\" width=\"100%\" height=\"auto\"></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/5a30863ae43df3e40bfdf9568e36f969\" tg-width=\"640\" tg-height=\"254\" width=\"100%\" height=\"auto\"><span>Source: Capital IQ</span></p>\n<p>One judging these companies' values by comparing them to their history at the early stages of these transformative new launches would’ve missed the opportunity without fault. New ventures tend to be in a sector that is more favorable and/or faster-growing than the company's current operations as these are the areas where managements tend to invest in. And these new ventures tend to have higher multiples increasing the overall multiple of the consolidated company. Looking at history and saying that the current multiple is expensive is essentially assuming the same multiple for the new venture as the company and is wrong.</p>\n<p>Disney is transforming itself from an old-world business into a new world one and provides the opportunity to invest today at the relatively early stages of the charts listed above. Legacy operations vary from deeply unfavorable, chord-cutting ailed linear networks to boring studios, consumer products, and parks while the new DTC venture is a highly scalable, fast-growing, cloud-based SaaS operation in a secular growth area. The multiple difference is stark. It’s normal that Disney’s multiple today is significantly higher than before, especially considering the coming surge in demand from the consumer reopening. I think that the multiple will continue to grow as DTC makes up a growing part of the business mix.</p>\n<p><b>A Sum of the Parts Approach Shows that Disney Offers Excellent Risk-Reward</b></p>\n<p>I will conduct a sum of the parts (SOTP) valuation to make sense of the situation and to avoid the fallacy of missing different parts of the business while looking at the big picture. I will divide the company into five main sub-segments: 1) linear networks: the legacy broadcasting operations, 2) DTC: the new streaming services, 3) content sales/licensing: the studio segment and related distribution, 4) parks and experiences: theme parks and related revenue such as F&amp;B, hospitality, and park merchandise, and 5) consumer products: Disney’s retail stores, merchandise, and licensed products. I believe that calculating an individual value for each segment reveals the fundamental value of the company much better than looking at historical multiples or comparing company level multiples to peers.</p>\n<p>I will analyze company valuation by breaking the financials apart and then multiplying them by appropriate multiples compared to appropriate peers. I will work on three scenarios using assumptions of various aggression: grey sky, base case, and blue sky. Take my work with a big grain of salt as it's more art than science. I will use my judgment in finding the correct multiple and peer group and my results will likely be biased by my view of the world. However, I’m very open to updating my work based on constructive criticism so please let me know if you have suggestions. I’m an owner of Disney stock and the true value of the company is important to me.</p>\n<p>Additionally, I’m happy to share my work with anyone who wants it. Let me know if you do. Even breaking the financials apart is hours of work due to the uniquely terrible and inconsistent way that Disney reports segment results. Below are the inputs I’ll be using.</p>\n<p><img src=\"https://static.tigerbbs.com/d23c348d7f6e07429699111643d63bd1\" tg-width=\"640\" tg-height=\"465\" width=\"100%\" height=\"auto\"></p>\n<p><b>Linear Networks Valuation</b></p>\n<p>I’m basing my linear networks work on EV/EBITDA and EV/Revenue multiples of the last twelve month values. I’m using broadcasting companies as my peer group. My grey and blue sky scenarios are the lowest and highest multiples in the peer group and my base case is the peer median. I’ve taken the initiative to award a higher-than-peer multiple in the base cases of many segments as I think that Disney’s incredible IP and power of its network and brand deserve it. But I didn’t on the networks segment as a) I don’t see a huge advantage over peers, and b) I wanted to be extra cautious on this segment as its future is in doubt. I’m calculating a $49 bn bear, $70 bn base, and $88 bn bull case valuations.</p>\n<p><img src=\"https://static.tigerbbs.com/ad837bf79cb399b59ce1b52a92b14030\" tg-width=\"640\" tg-height=\"162\" width=\"100%\" height=\"auto\"></p>\n<p><b>Direct To Consumer Valuation</b></p>\n<p>The DTC segment is the main one that will bring multiple expansion. It’s the AWS of Amazon and Azure of Microsoft. I’m using a peer group of streamers as well as B2C software subscription service vendors as I think that their dynamics are similar. I’m basing my work solely on the sales multiple as revenue is what’s most important for this group. My base case is a 3-turn premium to Netflix to adjust for Disney’s fast growth from nascent operations. Disney’s DTC revenues grew almost 60% YoY in its last quarter while Netflix grew less than 20%. I would say that this 3x premium to Netflix is even conservative and doesn’t sufficiently reflect the difference in growth. Moreover, Disney deserves a premium due to its greater IP. Disney’s content is best-in-class and can be watched and rewatched many times over. This moat will strengthen further as more of 21stCentury Fox content becomes available on the platform. In my opinion, the quality IP will translate into lower churn and higher customer lifetime value over time, and thus Disney’s current revenue is worth more than Netflix’s.</p>\n<p>My bull and bear cases are the top and bottom multiples in the group. The calculation yields a bear case $60bn, base case $211 bn, and bull case $267 bn value.</p>\n<p><img src=\"https://static.tigerbbs.com/6ea3cc58658886e6176743280daba654\" tg-width=\"640\" tg-height=\"161\" width=\"100%\" height=\"auto\"></p>\n<p>What is worth highlighting here is that even if Disney’s DTC offering fails as Sirius’ (SIRI) services did, they’re still worth &gt;$60bn. And I want to state the obvious and say that this is an extremely unlikely scenario. First, the viability of Disney’s streaming offers has been proven by the recent demand, and it's almost certain that there’s a large room for it in the streaming market. And second, movie streaming is more profitable than music, especially for content owners. Disney doesn’t have to pay royalties to content producers as it produces the content itself. Its DTC operations are much more scalable than those of Spotify (SPOT) and Sirius and deserve much higher multiples.</p>\n<p><b>Consumer Products Valuation</b></p>\n<p>Consumer products division is often forgotten and bundled with parks. However, it’s a completely different business and should be looked at in isolation. Disney both operates its stores and licenses its merchandise globally. Merchandise sold in parks isn’t in this segment and is included in Parks &amp; Experiences segment’s financials. My peer group here is of retailers or retail suppliers with strong brands and my chosen multiples are revenue and EBITDA.</p>\n<p>My chosen multiple for my base case is that of RH (RH) as I think that the companies prime valuation suits that of Disney. RH has premium products and strong pricing power. Disney’s retail merchandise may not be premium the same way but it definitely has pricing power. Consumers will pay more for products with Disney characters’ logos on them. Disney also has growth potential in this segment leveraging the new content produced from studios. My low multiples are those of Build-A-Bear’s (BBW) peer group low and my peak multiples are once again RH for revenue but Callaway (ELY) for EBITDA. The results are $8 bn bear, and $33 bn, and $38 bn base and bull case valuations.</p>\n<p>The chosen multiple yields</p>\n<p><img src=\"https://static.tigerbbs.com/b384a22812e613cae82c5aa2aacbd86a\" tg-width=\"640\" tg-height=\"188\" width=\"100%\" height=\"auto\"></p>\n<p><b>Content Sales/Licensing Valuation</b></p>\n<p>The content sales/licensing segment is the studios and related distribution. I’ve included Warner Music (WMG) due to the similarity in operations (producing content then distributing it) albeit in a different vertical. I will say that the peer group here isn’t perfect. Most large studios are consolidated into larger entities. I had to use the consolidated companies as peers which I don’t think is correct as the multiples for studios get diluted in the whole company. I’ve tried to adjust for this in my chosen multiples and give Disney a premium to peer average in my base case multiples. I went with peer low and high multiples for other cases.</p>\n<p>I chose to alter the valuation denominator for the entire group and use multiples over pre-pandemic values. I did this to cancel out the one-off effect of the pandemic and measure companies on their normal performance. Considering the backlog of releases that were delayed by the pandemic, I believe that a higher multiple is warranted. I choose Disney’s fiscal 2019 as the period which ends in September 2019 and adjusted peer multiples accordingly.</p>\n<p>The valuation for the segment came out to be $18 bn, $41 bn, $65 bn for the three scenarios.</p>\n<p><img src=\"https://static.tigerbbs.com/a87ff24e94fa379bb559742892fc1863\" tg-width=\"640\" tg-height=\"137\" width=\"100%\" height=\"auto\"></p>\n<p><b>Parks and Experiences Valuation</b></p>\n<p>I’ve followed a similar method here to what I did in studios and used multiples over pre-pandemic values. Parks were also harmed by the pandemic, perhaps even more than movies. And the reopening will see even greater demand. People locked inside distancing for more than a year and a half will want to indulge themselves in travel. Many families will choose Disney parks. Even those that thought of it as expensive will likely indulge themselves. The reopening warrants a premium multiple.</p>\n<p>Disney deserves a premium on top of that. The company has amazing pricing power. They’ve raised prices by&nbsp;ridiculous amounts&nbsp;far outstripping inflation. Consumers still flock to the parks. The best-in-class IP combined give Disney’s parks unmatched appeal. The new content from studios has the power to fuel new growth. The parks of Disney deserve a significant premium to what other park operators trade at.</p>\n<p>I’ve used SeaWorld’s (SEAS) numbers as my bear case and built varying amounts of premia on top of that for the other scenarios. I believe that even higher multiples are more than fair given Disney’s advantages but I’ll stick with these as I want to remain on the conservative side of things. I get $116 bn, $132 bn, and $150 bn for the three scenarios.</p>\n<p><img src=\"https://static.tigerbbs.com/f1d427c62e5982a7a68ca517c1e37ed9\" tg-width=\"640\" tg-height=\"144\" width=\"100%\" height=\"auto\"></p>\n<p><b>Putting it All Together Shows Significant Undervaluation</b></p>\n<p>Combining the values of 5 segments under the three scenarios yields $251 bn, $487 bn, and $609 bn in total EV. I want to account for the unallocated and shared OPEX which wasn’t reported in any of the segments. I multiply these costs by Disney’s current overall multiple and reduce them from the total EV. After reducing net debt as well I get implied market caps of $174 bn, $410 bn, and $531 bn for the three scenarios providing a 32% upside on the base case and a 44% loss and 72% gain on tail outcomes.</p>\n<p><img src=\"https://static.tigerbbs.com/153bca8cab0e1c08fe4f69485c1d08ef\" tg-width=\"408\" tg-height=\"360\" width=\"100%\" height=\"auto\"></p>\n<p>I want to make a particular note here of the conservativeness of the analysis. The two most important segments’, DTCs and P&amp;Es, bear cases are extremely bearish. I would think it improbable that Disney’s respective segments would trade at those multiples given today’s world. I think that the base case is highly achievable and that the blue sky scenario isn’t nearly as farfetched as the grey sky one and that it’s achievable as well.</p>\n<p>Given the risk-reward to the upside, particularly considering the probabilities of the three scenarios, I’m a buyer of Disney with high conviction.</p>\n<p><b>The Investment Comes with Large Execution Risk</b></p>\n<p>Disney may have huge potential but it has large execution risk as well. The largest portion of the valuation is tied to the nascent DTC operation. There is a lot that Disney needs to achieve to deliver on that front. I’m highly confident that it will. My belief is backed by the obvious demand for the content. I think that the company will be able to transfer at least some of its pricing power to the streaming business to make it a true software giant. However, if you don’t think that Disney will be able to deliver or that the future of the streaming industry is not as bright as valued for whatever reason, you may want to hold back.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Disney Is A Conviction Buy</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nDisney Is A Conviction Buy\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-04 17:03 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4465298-disney-is-conviction-buy><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nDisney today offers the opportunity to invest in a transition story at the relatively early stages. Investors today will likely be handsomely rewarded over time.\nLooking at Disney’s valuation...</p>\n\n<a href=\"https://seekingalpha.com/article/4465298-disney-is-conviction-buy\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"DIS":"迪士尼"},"source_url":"https://seekingalpha.com/article/4465298-disney-is-conviction-buy","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1171459652","content_text":"Summary\n\nDisney today offers the opportunity to invest in a transition story at the relatively early stages. Investors today will likely be handsomely rewarded over time.\nLooking at Disney’s valuation with a SOTP method shows significant undervaluation with attractive risk-reward.\nDisney is a conviction buy for me despite the execution risk.\n\nEnchantedFairy/iStock Editorial via Getty Images\nInvestment Thesis\nDisney’s (DIS) valuation is often misinterpreted, in my opinion. The company is at the early stages of a favorable transformation and will likely deliver results mirroring those of some great companies. Breaking the company into parts and valuing the segments individually is more appropriate than looking at the company as a whole as neither its history nor any other public company is an appropriate comparison. In doing so, I calculate 32% undervaluation with conservative estimates. I also calculate a very unlikely grey sky scenario of a 44% loss and a not-that-unlikely blue sky scenario of 72% gains. I love the risk-reward and am a buyer of the company with conviction despite the relatively high execution risk.\nMost Misjudge Disney’s Valuation\nA lot of investors overlook the underlying parts of Disney when looking at the company’s valuation. I’ve noticed this reading many SA articles that have neutral and bearish views on the stock. Most authors analyze comparing current multiples to Disney’s history. This method is significantly misleading as Disney is a different company today than it was a few years ago. It makes sense to use historical multiples in finding discounts arising from diversion from the mean with stable businesses. Comparing a changing business to its history is like comparing the multiples of companies with different operations.\nAnother thing I thought was wrong was the sales multiple used. Sales multiple only makes sense when comparing very similar companies as the profitability structure and accounting of revenues can change significantly. Even when comparing similar companies, intuition in adjusting premia is common to account for said differences. Comparing Disney’s current P/S to what it was years ago is a futile endeavor in assessing the company’s valuation.\nFurthermore, a certain amount of valuation premium compared to its history is warranted for Disney. Parks and studios make up a significant chunk of Disney earnings and thus valuation and they’ve been negatively affected by the pandemic. Studios had to delay launches due to production cuts and parks had to close down and consumers were afraid to travel to them. Now, with the pent-up demand and with the string of new launches, we should see this trend mean-revert. Revenues and earnings of the coming quarters will be higher than what they were in the pandemic times. Valuation adjusts to this fact which inflates trailing multiples.\nChanges in the Business Changes Multiples Permanently\nWhen a company pivots into a new model its multiple will adjust. A favorable pivot will bring a larger multiple and vice versa. I want to provide concrete examples to support my thesis with charts of sales multiples with accompanying price moves. First is the greatest of pivots, Netflix’s (NFLX) ramping of streaming from mailing DVDs. The pioneering trailblazer of streaming’s success is evident in its growing multiples. Next up, Adobe (ADBE) and Autodesk’s (ADSK) cloud transition. Autodesk followed Adobe’s lead in changing its business model from a license-based one to a favorable SaaS model, multiple expansions followed. And I have to mention perhaps the greatest of corporate pivots, the big daddy Microsoft’s switch to cloud and launch of Azure. The big and slow giant achieved an amazing feat and adapted to the age of cloud computing and earned a massive multiple expansion after years of contraction. And last but definitely not least let’s not forget about the store of everything Amazon’s (AMZN) launch of AWS. The company earned a new multiple with its new fast-growing, highly profitable business. The multiples went on to expand for years and years accompanied by a rocketing stock price.\n\nSource: Capital IQ\nOne judging these companies' values by comparing them to their history at the early stages of these transformative new launches would’ve missed the opportunity without fault. New ventures tend to be in a sector that is more favorable and/or faster-growing than the company's current operations as these are the areas where managements tend to invest in. And these new ventures tend to have higher multiples increasing the overall multiple of the consolidated company. Looking at history and saying that the current multiple is expensive is essentially assuming the same multiple for the new venture as the company and is wrong.\nDisney is transforming itself from an old-world business into a new world one and provides the opportunity to invest today at the relatively early stages of the charts listed above. Legacy operations vary from deeply unfavorable, chord-cutting ailed linear networks to boring studios, consumer products, and parks while the new DTC venture is a highly scalable, fast-growing, cloud-based SaaS operation in a secular growth area. The multiple difference is stark. It’s normal that Disney’s multiple today is significantly higher than before, especially considering the coming surge in demand from the consumer reopening. I think that the multiple will continue to grow as DTC makes up a growing part of the business mix.\nA Sum of the Parts Approach Shows that Disney Offers Excellent Risk-Reward\nI will conduct a sum of the parts (SOTP) valuation to make sense of the situation and to avoid the fallacy of missing different parts of the business while looking at the big picture. I will divide the company into five main sub-segments: 1) linear networks: the legacy broadcasting operations, 2) DTC: the new streaming services, 3) content sales/licensing: the studio segment and related distribution, 4) parks and experiences: theme parks and related revenue such as F&B, hospitality, and park merchandise, and 5) consumer products: Disney’s retail stores, merchandise, and licensed products. I believe that calculating an individual value for each segment reveals the fundamental value of the company much better than looking at historical multiples or comparing company level multiples to peers.\nI will analyze company valuation by breaking the financials apart and then multiplying them by appropriate multiples compared to appropriate peers. I will work on three scenarios using assumptions of various aggression: grey sky, base case, and blue sky. Take my work with a big grain of salt as it's more art than science. I will use my judgment in finding the correct multiple and peer group and my results will likely be biased by my view of the world. However, I’m very open to updating my work based on constructive criticism so please let me know if you have suggestions. I’m an owner of Disney stock and the true value of the company is important to me.\nAdditionally, I’m happy to share my work with anyone who wants it. Let me know if you do. Even breaking the financials apart is hours of work due to the uniquely terrible and inconsistent way that Disney reports segment results. Below are the inputs I’ll be using.\n\nLinear Networks Valuation\nI’m basing my linear networks work on EV/EBITDA and EV/Revenue multiples of the last twelve month values. I’m using broadcasting companies as my peer group. My grey and blue sky scenarios are the lowest and highest multiples in the peer group and my base case is the peer median. I’ve taken the initiative to award a higher-than-peer multiple in the base cases of many segments as I think that Disney’s incredible IP and power of its network and brand deserve it. But I didn’t on the networks segment as a) I don’t see a huge advantage over peers, and b) I wanted to be extra cautious on this segment as its future is in doubt. I’m calculating a $49 bn bear, $70 bn base, and $88 bn bull case valuations.\n\nDirect To Consumer Valuation\nThe DTC segment is the main one that will bring multiple expansion. It’s the AWS of Amazon and Azure of Microsoft. I’m using a peer group of streamers as well as B2C software subscription service vendors as I think that their dynamics are similar. I’m basing my work solely on the sales multiple as revenue is what’s most important for this group. My base case is a 3-turn premium to Netflix to adjust for Disney’s fast growth from nascent operations. Disney’s DTC revenues grew almost 60% YoY in its last quarter while Netflix grew less than 20%. I would say that this 3x premium to Netflix is even conservative and doesn’t sufficiently reflect the difference in growth. Moreover, Disney deserves a premium due to its greater IP. Disney’s content is best-in-class and can be watched and rewatched many times over. This moat will strengthen further as more of 21stCentury Fox content becomes available on the platform. In my opinion, the quality IP will translate into lower churn and higher customer lifetime value over time, and thus Disney’s current revenue is worth more than Netflix’s.\nMy bull and bear cases are the top and bottom multiples in the group. The calculation yields a bear case $60bn, base case $211 bn, and bull case $267 bn value.\n\nWhat is worth highlighting here is that even if Disney’s DTC offering fails as Sirius’ (SIRI) services did, they’re still worth >$60bn. And I want to state the obvious and say that this is an extremely unlikely scenario. First, the viability of Disney’s streaming offers has been proven by the recent demand, and it's almost certain that there’s a large room for it in the streaming market. And second, movie streaming is more profitable than music, especially for content owners. Disney doesn’t have to pay royalties to content producers as it produces the content itself. Its DTC operations are much more scalable than those of Spotify (SPOT) and Sirius and deserve much higher multiples.\nConsumer Products Valuation\nConsumer products division is often forgotten and bundled with parks. However, it’s a completely different business and should be looked at in isolation. Disney both operates its stores and licenses its merchandise globally. Merchandise sold in parks isn’t in this segment and is included in Parks & Experiences segment’s financials. My peer group here is of retailers or retail suppliers with strong brands and my chosen multiples are revenue and EBITDA.\nMy chosen multiple for my base case is that of RH (RH) as I think that the companies prime valuation suits that of Disney. RH has premium products and strong pricing power. Disney’s retail merchandise may not be premium the same way but it definitely has pricing power. Consumers will pay more for products with Disney characters’ logos on them. Disney also has growth potential in this segment leveraging the new content produced from studios. My low multiples are those of Build-A-Bear’s (BBW) peer group low and my peak multiples are once again RH for revenue but Callaway (ELY) for EBITDA. The results are $8 bn bear, and $33 bn, and $38 bn base and bull case valuations.\nThe chosen multiple yields\n\nContent Sales/Licensing Valuation\nThe content sales/licensing segment is the studios and related distribution. I’ve included Warner Music (WMG) due to the similarity in operations (producing content then distributing it) albeit in a different vertical. I will say that the peer group here isn’t perfect. Most large studios are consolidated into larger entities. I had to use the consolidated companies as peers which I don’t think is correct as the multiples for studios get diluted in the whole company. I’ve tried to adjust for this in my chosen multiples and give Disney a premium to peer average in my base case multiples. I went with peer low and high multiples for other cases.\nI chose to alter the valuation denominator for the entire group and use multiples over pre-pandemic values. I did this to cancel out the one-off effect of the pandemic and measure companies on their normal performance. Considering the backlog of releases that were delayed by the pandemic, I believe that a higher multiple is warranted. I choose Disney’s fiscal 2019 as the period which ends in September 2019 and adjusted peer multiples accordingly.\nThe valuation for the segment came out to be $18 bn, $41 bn, $65 bn for the three scenarios.\n\nParks and Experiences Valuation\nI’ve followed a similar method here to what I did in studios and used multiples over pre-pandemic values. Parks were also harmed by the pandemic, perhaps even more than movies. And the reopening will see even greater demand. People locked inside distancing for more than a year and a half will want to indulge themselves in travel. Many families will choose Disney parks. Even those that thought of it as expensive will likely indulge themselves. The reopening warrants a premium multiple.\nDisney deserves a premium on top of that. The company has amazing pricing power. They’ve raised prices by ridiculous amounts far outstripping inflation. Consumers still flock to the parks. The best-in-class IP combined give Disney’s parks unmatched appeal. The new content from studios has the power to fuel new growth. The parks of Disney deserve a significant premium to what other park operators trade at.\nI’ve used SeaWorld’s (SEAS) numbers as my bear case and built varying amounts of premia on top of that for the other scenarios. I believe that even higher multiples are more than fair given Disney’s advantages but I’ll stick with these as I want to remain on the conservative side of things. I get $116 bn, $132 bn, and $150 bn for the three scenarios.\n\nPutting it All Together Shows Significant Undervaluation\nCombining the values of 5 segments under the three scenarios yields $251 bn, $487 bn, and $609 bn in total EV. I want to account for the unallocated and shared OPEX which wasn’t reported in any of the segments. I multiply these costs by Disney’s current overall multiple and reduce them from the total EV. After reducing net debt as well I get implied market caps of $174 bn, $410 bn, and $531 bn for the three scenarios providing a 32% upside on the base case and a 44% loss and 72% gain on tail outcomes.\n\nI want to make a particular note here of the conservativeness of the analysis. The two most important segments’, DTCs and P&Es, bear cases are extremely bearish. I would think it improbable that Disney’s respective segments would trade at those multiples given today’s world. I think that the base case is highly achievable and that the blue sky scenario isn’t nearly as farfetched as the grey sky one and that it’s achievable as well.\nGiven the risk-reward to the upside, particularly considering the probabilities of the three scenarios, I’m a buyer of Disney with high conviction.\nThe Investment Comes with Large Execution Risk\nDisney may have huge potential but it has large execution risk as well. The largest portion of the valuation is tied to the nascent DTC operation. There is a lot that Disney needs to achieve to deliver on that front. I’m highly confident that it will. My belief is backed by the obvious demand for the content. I think that the company will be able to transfer at least some of its pricing power to the streaming business to make it a true software giant. However, if you don’t think that Disney will be able to deliver or that the future of the streaming industry is not as bright as valued for whatever reason, you may want to hold back.","news_type":1},"isVote":1,"tweetType":1,"viewCount":929,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":842493177,"gmtCreate":1636212081124,"gmtModify":1636212081260,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"Starbucks' high debt is a concern that makes me the contrarian in this faceoff. I go with DIS.","listText":"Starbucks' high debt is a concern that makes me the contrarian in this faceoff. I go with DIS.","text":"Starbucks' high debt is a concern that makes me the contrarian in this faceoff. I go with DIS.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/842493177","repostId":"1156284404","repostType":2,"repost":{"id":"1156284404","kind":"news","pubTimestamp":1636121042,"share":"https://www.laohu8.com/m/news/1156284404?lang=&edition=full","pubTime":"2021-11-05 22:04","market":"us","language":"en","title":"Better Buy: Disney vs. Starbucks","url":"https://stock-news.laohu8.com/highlight/detail?id=1156284404","media":"Motley Fool ","summary":"Both have strong brands, but one gets the nod.","content":"<p>It is always difficult to choose between two high-quality companies. Ideally, you might like to purchase both. Yet, frequently investing comes down to where to put your hard-earned money.</p>\n<p>That's the case with&nbsp;<b>Walt Disney</b>&nbsp;and&nbsp;<b>Starbucks</b>. Both stocks have had a challenging 2021. Disney's share price is down 6%, while Starbucks' stock has dropped by 5%. This comes as the&nbsp;<b>S&amp;P 500</b>&nbsp;has risen by 24% during that time.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/92d7cd6a38784299fa1cce99ae01a4cd\" tg-width=\"2000\" tg-height=\"1333\" width=\"100%\" height=\"auto\"><span>IMAGE SOURCE: GETTY IMAGES.</span></p>\n<p>However, both offer investors solid long-term growth prospects. The question is: Which one is the better investment right now?</p>\n<p><b>Starbucks</b></p>\n<p>Investors clearly didn't like Starbucks' latest quarterly earnings report. Following the late-October release, they sent the stock down by 6% to about $106. The issue stemmed from&nbsp;higher costs&nbsp;that will likely continue weighing on near-term profitability.</p>\n<p>In the latest quarter, Starbucks' operating margin under&nbsp;U.S. generally accepted accounting principles(GAAP) more than doubled to 18.2%. But for next year, management expects a 17% margin, largely due to higher wages. While this is below its 18% to 19% long-term target, I believe this will prove temporary.</p>\n<p>That's because Starbucks continues to post strong sales growth. That will help the company increase prices and leverage expenses.</p>\n<p>Starbucks' quarterly revenue rose by 31% to $8.1 billion, driven by new restaurant openings and a 17% increase in same-store sales. For fiscal 2022, management expects a high single-digit percentage increase in comps and to open 2,000 restaurants, mostly outside of the U.S. It anticipates these will lead to revenue of $32.5 billion to $33 billion,</p>\n<p>In short, demand for Starbucks' products, which took a pause during the pandemic due to store closures, remains strong.</p>\n<p><b>Walt Disney</b></p>\n<p>Disney's shares have fallen this year due to concerns about&nbsp;slowing growth at Disney+, its streaming service. As it grew by leaps and bounds during the pandemic, I'm not concerned.</p>\n<p>After all, Disney+ had 116 million paid subscribers at the start of July 2021, compared to 103.6 million in April. This is also more than double the 57.5 million from a year ago.</p>\n<p>While it may not have the supersonic growth of the past, Disney+ is still adding subscribers at a nice pace. What's more, Disney is far more than a streaming service. Its vast media empire includes parks, movies, several television networks, and retail stores.</p>\n<p>This helps the company produce strong results, even if one part of the business slows. For instance, this year saw the return of live sports that helped its ESPN network, and theme parks reopened. Its quarterly revenue grew by 45% to $17 billion year over year.</p>\n<p>With popular media properties, such as a stable of Marvel characters and movies, the future looks bright for Disney. That's because it has highly recognized and well-regarded brands that have proven their staying power. Management has strengthened its position, including buying Twenty-First Century Fox a couple of years ago, which added television networks, Marvel characters, and provided a controlling interest in the streaming service Hulu.</p>\n<p>After examining both companies, both have strong brands that attract a lot of people. For me, the edge goes to Starbucks, since it has increased dividends since 2010, including during the pandemic. It's nice to receive the income, and it's a positive sign that management and the board of directors have confidence in the future.</p>\n<p>Unfortunately, Disney suspended its dividend last year. While that's certainly understandable given the uncertainty created by the pandemic, it does give a leg up to Starbucks, which saw fit to increase payments.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Better Buy: Disney vs. Starbucks</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBetter Buy: Disney vs. Starbucks\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-05 22:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2021/11/05/better-buy-disney-vs-starbucks/><strong>Motley Fool </strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>It is always difficult to choose between two high-quality companies. Ideally, you might like to purchase both. Yet, frequently investing comes down to where to put your hard-earned money.\nThat's the ...</p>\n\n<a href=\"https://www.fool.com/investing/2021/11/05/better-buy-disney-vs-starbucks/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"DIS":"迪士尼","SBUX":"星巴克"},"source_url":"https://www.fool.com/investing/2021/11/05/better-buy-disney-vs-starbucks/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1156284404","content_text":"It is always difficult to choose between two high-quality companies. Ideally, you might like to purchase both. Yet, frequently investing comes down to where to put your hard-earned money.\nThat's the case with Walt Disney and Starbucks. Both stocks have had a challenging 2021. Disney's share price is down 6%, while Starbucks' stock has dropped by 5%. This comes as the S&P 500 has risen by 24% during that time.\nIMAGE SOURCE: GETTY IMAGES.\nHowever, both offer investors solid long-term growth prospects. The question is: Which one is the better investment right now?\nStarbucks\nInvestors clearly didn't like Starbucks' latest quarterly earnings report. Following the late-October release, they sent the stock down by 6% to about $106. The issue stemmed from higher costs that will likely continue weighing on near-term profitability.\nIn the latest quarter, Starbucks' operating margin under U.S. generally accepted accounting principles(GAAP) more than doubled to 18.2%. But for next year, management expects a 17% margin, largely due to higher wages. While this is below its 18% to 19% long-term target, I believe this will prove temporary.\nThat's because Starbucks continues to post strong sales growth. That will help the company increase prices and leverage expenses.\nStarbucks' quarterly revenue rose by 31% to $8.1 billion, driven by new restaurant openings and a 17% increase in same-store sales. For fiscal 2022, management expects a high single-digit percentage increase in comps and to open 2,000 restaurants, mostly outside of the U.S. It anticipates these will lead to revenue of $32.5 billion to $33 billion,\nIn short, demand for Starbucks' products, which took a pause during the pandemic due to store closures, remains strong.\nWalt Disney\nDisney's shares have fallen this year due to concerns about slowing growth at Disney+, its streaming service. As it grew by leaps and bounds during the pandemic, I'm not concerned.\nAfter all, Disney+ had 116 million paid subscribers at the start of July 2021, compared to 103.6 million in April. This is also more than double the 57.5 million from a year ago.\nWhile it may not have the supersonic growth of the past, Disney+ is still adding subscribers at a nice pace. What's more, Disney is far more than a streaming service. Its vast media empire includes parks, movies, several television networks, and retail stores.\nThis helps the company produce strong results, even if one part of the business slows. For instance, this year saw the return of live sports that helped its ESPN network, and theme parks reopened. Its quarterly revenue grew by 45% to $17 billion year over year.\nWith popular media properties, such as a stable of Marvel characters and movies, the future looks bright for Disney. That's because it has highly recognized and well-regarded brands that have proven their staying power. Management has strengthened its position, including buying Twenty-First Century Fox a couple of years ago, which added television networks, Marvel characters, and provided a controlling interest in the streaming service Hulu.\nAfter examining both companies, both have strong brands that attract a lot of people. For me, the edge goes to Starbucks, since it has increased dividends since 2010, including during the pandemic. It's nice to receive the income, and it's a positive sign that management and the board of directors have confidence in the future.\nUnfortunately, Disney suspended its dividend last year. While that's certainly understandable given the uncertainty created by the pandemic, it does give a leg up to Starbucks, which saw fit to increase payments.","news_type":1},"isVote":1,"tweetType":1,"viewCount":795,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":841306387,"gmtCreate":1635874814916,"gmtModify":1635874814916,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"Set my eyes on this ticker","listText":"Set my eyes on this ticker","text":"Set my eyes on this ticker","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/841306387","repostId":"1129056623","repostType":2,"repost":{"id":"1129056623","kind":"news","pubTimestamp":1635817478,"share":"https://www.laohu8.com/m/news/1129056623?lang=&edition=full","pubTime":"2021-11-02 09:44","market":"us","language":"en","title":"Electric vehicle maker Rivian seeks to raise $8.4 billion in IPO","url":"https://stock-news.laohu8.com/highlight/detail?id=1129056623","media":"TechCrunch","summary":"Electric vehicle startup Rivian hopes to raise up $8.4 billion in its initial public offering, accor","content":"<p>Electric vehicle startup Rivian hopes to raise up $8.4 billion in its initial public offering, according to aregulatory filing&nbsp;posted Monday.</p>\n<p>The company, which is backed by Amazon, said in the filing that it plans to offer 135 million shares at a price between $57 and $62. Underwriters also have an option to buy up to 20.25 million additional shares. If underwriters exercise that option, Rivian would raise as much as $9.6 billion.</p>\n<p>Based on the number of outstanding shares, that would put its market valuation at about $53 billion. If employee stock options and other restricted shares are considered, Rivian's valuation could be as high as $60 billion.</p>\n<p>Rivian filed October 1 to become a&nbsp;publicly traded company&nbsp;in the United States. The S-1 document did not disclose the targeted share price at the time. An amended document filed Monday provided the new information, which included interest from repeat backer Amazon and newcomer Blackstone in Rivian.</p>\n<p>Amazon, funds and accounts advised by T. Rowe Price Associates, Coatue Management, Franklin Templeton, Capital Research Global Investors, D1 Capital Partners LP, Third Point LLC, funds affiliated with Blackstone Alternative Asset Management, Dragoneer Investment Group LLC and certain entities affiliated with Soros Fund Management LLC have indicated an interest in buying up to $5 billion of shares of Class A common stock.</p>\n<p>A recent filing by Amazon shows the e-commerce giant already holds a&nbsp;20% stake in Rivian.</p>\n<p>Rivian's filing was been one of the most anticipated of the year; now attention has turned to its public debut on the Nasdaq exchange. Rivian will trade under the ticker symbol RIVN.</p>","source":"lsy1602557183277","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Electric vehicle maker Rivian seeks to raise $8.4 billion in IPO</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nElectric vehicle maker Rivian seeks to raise $8.4 billion in IPO\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-02 09:44 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/electric-vehicle-maker-rivian-seeks-231423387.html><strong>TechCrunch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Electric vehicle startup Rivian hopes to raise up $8.4 billion in its initial public offering, according to aregulatory filing posted Monday.\nThe company, which is backed by Amazon, said in the filing...</p>\n\n<a href=\"https://finance.yahoo.com/news/electric-vehicle-maker-rivian-seeks-231423387.html\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"AMZN":"亚马逊","RIVN":"Rivian Automotive, Inc."},"source_url":"https://finance.yahoo.com/news/electric-vehicle-maker-rivian-seeks-231423387.html","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1129056623","content_text":"Electric vehicle startup Rivian hopes to raise up $8.4 billion in its initial public offering, according to aregulatory filing posted Monday.\nThe company, which is backed by Amazon, said in the filing that it plans to offer 135 million shares at a price between $57 and $62. Underwriters also have an option to buy up to 20.25 million additional shares. If underwriters exercise that option, Rivian would raise as much as $9.6 billion.\nBased on the number of outstanding shares, that would put its market valuation at about $53 billion. If employee stock options and other restricted shares are considered, Rivian's valuation could be as high as $60 billion.\nRivian filed October 1 to become a publicly traded company in the United States. The S-1 document did not disclose the targeted share price at the time. An amended document filed Monday provided the new information, which included interest from repeat backer Amazon and newcomer Blackstone in Rivian.\nAmazon, funds and accounts advised by T. Rowe Price Associates, Coatue Management, Franklin Templeton, Capital Research Global Investors, D1 Capital Partners LP, Third Point LLC, funds affiliated with Blackstone Alternative Asset Management, Dragoneer Investment Group LLC and certain entities affiliated with Soros Fund Management LLC have indicated an interest in buying up to $5 billion of shares of Class A common stock.\nA recent filing by Amazon shows the e-commerce giant already holds a 20% stake in Rivian.\nRivian's filing was been one of the most anticipated of the year; now attention has turned to its public debut on the Nasdaq exchange. Rivian will trade under the ticker symbol RIVN.","news_type":1},"isVote":1,"tweetType":1,"viewCount":852,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":840476143,"gmtCreate":1635681482769,"gmtModify":1635682019055,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"Jim Cramer just renamed FAANG into MAMAA. Meta Apple Microsoft Amazon Alphabet.","listText":"Jim Cramer just renamed FAANG into MAMAA. Meta Apple Microsoft Amazon Alphabet.","text":"Jim Cramer just renamed FAANG into MAMAA. Meta Apple Microsoft Amazon Alphabet.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/840476143","repostId":"2179210354","repostType":2,"repost":{"id":"2179210354","kind":"news","pubTimestamp":1635506789,"share":"https://www.laohu8.com/m/news/2179210354?lang=&edition=full","pubTime":"2021-10-29 19:26","market":"us","language":"en","title":"Facebook's Mark Zuckerberg just ruined one of the biggest investing abbreviations ever","url":"https://stock-news.laohu8.com/highlight/detail?id=2179210354","media":"Yahoo Finance","summary":"Facebook(FB). Apple. Amazon. Netflix. Google. Five Big Tech giants known in investing circles simply","content":"<p>Facebook(FB). Apple. Amazon. Netflix. Google. Five Big Tech giants known in investing circles simply as FAANG for years.</p>\n<p>That was until Mark Zuckerberg channeled his inner meta on Thursday.</p>\n<p>The FAANG investing acronym was created in 2013 by Jim Cramer, the founder of TheStreet (full disclosure, my former boss who also created the term \"Cloud Kings\"). It was both catchy as hell and true to form for the companies it represented.</p>\n<p>Think of a fang on a rabid dog and it's not unlike all five tech giants shredding the throats of inferior companies across the spectrum. And because of that ferocity leading to eye-popping profits almost every single quarter (except Amazon on Thursday night), fang also reflected the aggressive nature of the stock prices of all five tech beasts.</p>\n<p>FAANG as an investment has just worked incredibly well in popular investing culture, and financially speaking.</p>\n<p>The NYSE FANG Index — which tracks mostly the performance of these companies — has returned a sterling 455% over the past five years. Facebook — the first name in the investing acronym —has gained 163% in five years time.</p>\n<p>Collectively, the five FAANG stocks have appreciated an average of 322% in the past five years.</p>\n<p>Impressive stuff.</p>\n<p>But now all the investing fun here is done because of Zuck.</p>\n<p>Come Dec. 1, Facebook will officially change its name to Metaverse. New ticker symbol: MVRS.</p>\n<p>So get ready to usher in the era of MAANG. We hope it will prove as fruitful as the soon to be deceased FAANG.</p>","source":"yahoofinance","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Facebook's Mark Zuckerberg just ruined one of the biggest investing abbreviations ever</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nFacebook's Mark Zuckerberg just ruined one of the biggest investing abbreviations ever\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-29 19:26 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/facebooks-mark-zuckerberg-just-ruined-one-of-the-biggest-investing-abbreviations-ever-111723613.html><strong>Yahoo Finance</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Facebook(FB). Apple. Amazon. Netflix. Google. Five Big Tech giants known in investing circles simply as FAANG for years.\nThat was until Mark Zuckerberg channeled his inner meta on Thursday.\nThe FAANG ...</p>\n\n<a href=\"https://finance.yahoo.com/news/facebooks-mark-zuckerberg-just-ruined-one-of-the-biggest-investing-abbreviations-ever-111723613.html\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"MSFT":"微软","AAPL":"苹果","GOOG":"谷歌","CRM":"赛富时","AMZN":"亚马逊","GOOGL":"谷歌A","NFLX":"奈飞"},"source_url":"https://finance.yahoo.com/news/facebooks-mark-zuckerberg-just-ruined-one-of-the-biggest-investing-abbreviations-ever-111723613.html","is_english":true,"share_image_url":"https://static.laohu8.com/5f26f4a48f9cb3e29be4d71d3ba8c038","article_id":"2179210354","content_text":"Facebook(FB). Apple. Amazon. Netflix. Google. Five Big Tech giants known in investing circles simply as FAANG for years.\nThat was until Mark Zuckerberg channeled his inner meta on Thursday.\nThe FAANG investing acronym was created in 2013 by Jim Cramer, the founder of TheStreet (full disclosure, my former boss who also created the term \"Cloud Kings\"). It was both catchy as hell and true to form for the companies it represented.\nThink of a fang on a rabid dog and it's not unlike all five tech giants shredding the throats of inferior companies across the spectrum. And because of that ferocity leading to eye-popping profits almost every single quarter (except Amazon on Thursday night), fang also reflected the aggressive nature of the stock prices of all five tech beasts.\nFAANG as an investment has just worked incredibly well in popular investing culture, and financially speaking.\nThe NYSE FANG Index — which tracks mostly the performance of these companies — has returned a sterling 455% over the past five years. Facebook — the first name in the investing acronym —has gained 163% in five years time.\nCollectively, the five FAANG stocks have appreciated an average of 322% in the past five years.\nImpressive stuff.\nBut now all the investing fun here is done because of Zuck.\nCome Dec. 1, Facebook will officially change its name to Metaverse. New ticker symbol: MVRS.\nSo get ready to usher in the era of MAANG. We hope it will prove as fruitful as the soon to be deceased FAANG.","news_type":1},"isVote":1,"tweetType":1,"viewCount":785,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":854349578,"gmtCreate":1635423539523,"gmtModify":1635423571408,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"[财迷]","listText":"[财迷]","text":"[财迷]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/854349578","repostId":"1119174849","repostType":2,"isVote":1,"tweetType":1,"viewCount":847,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":856404548,"gmtCreate":1635206022378,"gmtModify":1635206022488,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"What to buy before earnings?&nbsp;","listText":"What to buy before earnings?&nbsp;","text":"What to buy before earnings?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/856404548","repostId":"2178475607","repostType":2,"isVote":1,"tweetType":1,"viewCount":709,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":859841370,"gmtCreate":1634689109327,"gmtModify":1634695383176,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"This is the next best thing since Bitcoin itself. Watch out for other ETFs coming soon but due to Proshares being the first Bitcoin ETF, it may just be the market leader.&nbsp;","listText":"This is the next best thing since Bitcoin itself. Watch out for other ETFs coming soon but due to Proshares being the first Bitcoin ETF, it may just be the market leader.&nbsp;","text":"This is the next best thing since Bitcoin itself. Watch out for other ETFs coming soon but due to Proshares being the first Bitcoin ETF, it may just be the market leader.","images":[{"img":"https://static.tigerbbs.com/eafcbeaeaaa2e1405767c8fea2044a17","width":"1080","height":"3543"}],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/859841370","isVote":1,"tweetType":1,"viewCount":802,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":1,"langContent":"CN","totalScore":0},{"id":859856637,"gmtCreate":1634688744348,"gmtModify":1634688744420,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"Those who missed out on the crypto due to high price can now dip into this etf while it is still affordable.&nbsp;[得意]&nbsp;","listText":"Those who missed out on the crypto due to high price can now dip into this etf while it is still affordable.&nbsp;[得意]&nbsp;","text":"Those who missed out on the crypto due to high price can now dip into this etf while it is still affordable. [得意]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/859856637","repostId":"2176109068","repostType":2,"isVote":1,"tweetType":1,"viewCount":157,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":828898973,"gmtCreate":1633879264856,"gmtModify":1633879264856,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"<a href=\"https://laohu8.com/S/IIVI\">$II-VI Inc(IIVI)$</a>this stock is deeply integrated with Apple iPhone with its optical sensors and components. It is in a dip but clearly a great opportunity for those who has done their homework.","listText":"<a href=\"https://laohu8.com/S/IIVI\">$II-VI Inc(IIVI)$</a>this stock is deeply integrated with Apple iPhone with its optical sensors and components. It is in a dip but clearly a great opportunity for those who has done their homework.","text":"$II-VI Inc(IIVI)$this stock is deeply integrated with Apple iPhone with its optical sensors and components. It is in a dip but clearly a great opportunity for those who has done their homework.","images":[{"img":"https://static.tigerbbs.com/3a141d83efd5f162e2184a78b63fbe66","width":"1080","height":"3543"}],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/828898973","isVote":1,"tweetType":1,"viewCount":1432,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":1,"langContent":"CN","totalScore":0},{"id":829105899,"gmtCreate":1633478419059,"gmtModify":1633478419128,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"<a href=\"https://laohu8.com/S/BDRY\">$Breakwave Dry Bulk Shipping ETF(BDRY)$</a>with YTD at 390% vs SP500's 14%, the wave is riding hight for this one.","listText":"<a href=\"https://laohu8.com/S/BDRY\">$Breakwave Dry Bulk Shipping ETF(BDRY)$</a>with YTD at 390% vs SP500's 14%, the wave is riding hight for this one.","text":"$Breakwave Dry Bulk Shipping ETF(BDRY)$with YTD at 390% vs SP500's 14%, the wave is riding hight for this one.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/829105899","isVote":1,"tweetType":1,"viewCount":639,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":865979767,"gmtCreate":1632938821395,"gmtModify":1632938821506,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"I am buying more.","listText":"I am buying more.","text":"I am buying more.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/865979767","repostId":"1159395062","repostType":2,"isVote":1,"tweetType":1,"viewCount":383,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":863426097,"gmtCreate":1632414528719,"gmtModify":1632729447944,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"<a href=\"https://laohu8.com/S/TTWO\">$Take-Two(TTWO)$</a>Sep dip makes this a bargain as&nbsp;fair value is&nbsp;at USD199.76&nbsp;","listText":"<a href=\"https://laohu8.com/S/TTWO\">$Take-Two(TTWO)$</a>Sep dip makes this a bargain as&nbsp;fair value is&nbsp;at USD199.76&nbsp;","text":"$Take-Two(TTWO)$Sep dip makes this a bargain as fair value is at USD199.76","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":8,"repostSize":0,"link":"https://laohu8.com/post/863426097","isVote":1,"tweetType":1,"viewCount":114,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"3479274702625278","authorId":"3479274702625278","name":"老夫追涨杀跌","avatar":"https://static.tigerbbs.com/53d8be38e6bbbfa27d16721be9a4e59b","crmLevel":1,"crmLevelSwitch":0,"idStr":"3479274702625278","authorIdStr":"3479274702625278"},"content":"总市值 162亿 流通市值 153亿 总股本 1.11亿 流通股本 1.04亿 52周最高 214.91 52周最低 144.58 市盈率 26.13 市净率 4.48 股息 0 股息收益率 0.00% ROA 8.04% ROE 20.78% 每股收益 5.61，经营数据还可以，为什么跌跌不休？","text":"总市值 162亿 流通市值 153亿 总股本 1.11亿 流通股本 1.04亿 52周最高 214.91 52周最低 144.58 市盈率 26.13 市净率 4.48 股息 0 股息收益率 0.00% ROA 8.04% ROE 20.78% 每股收益 5.61，经营数据还可以，为什么跌跌不休？","html":"总市值 162亿 流通市值 153亿 总股本 1.11亿 流通股本 1.04亿 52周最高 214.91 52周最低 144.58 市盈率 26.13 市净率 4.48 股息 0 股息收益率 0.00% ROA 8.04% ROE 20.78% 每股收益 5.61，经营数据还可以，为什么跌跌不休？"}],"imageCount":0,"langContent":"EN","totalScore":0}],"hots":[{"id":863426097,"gmtCreate":1632414528719,"gmtModify":1632729447944,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"<a href=\"https://laohu8.com/S/TTWO\">$Take-Two(TTWO)$</a>Sep dip makes this a bargain as&nbsp;fair value is&nbsp;at USD199.76&nbsp;","listText":"<a href=\"https://laohu8.com/S/TTWO\">$Take-Two(TTWO)$</a>Sep dip makes this a bargain as&nbsp;fair value is&nbsp;at USD199.76&nbsp;","text":"$Take-Two(TTWO)$Sep dip makes this a bargain as fair value is at USD199.76","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":8,"repostSize":0,"link":"https://laohu8.com/post/863426097","isVote":1,"tweetType":1,"viewCount":114,"authorTweetTopStatus":1,"verified":2,"comments":[{"author":{"id":"3479274702625278","authorId":"3479274702625278","name":"老夫追涨杀跌","avatar":"https://static.tigerbbs.com/53d8be38e6bbbfa27d16721be9a4e59b","crmLevel":1,"crmLevelSwitch":0,"idStr":"3479274702625278","authorIdStr":"3479274702625278"},"content":"总市值 162亿 流通市值 153亿 总股本 1.11亿 流通股本 1.04亿 52周最高 214.91 52周最低 144.58 市盈率 26.13 市净率 4.48 股息 0 股息收益率 0.00% ROA 8.04% ROE 20.78% 每股收益 5.61，经营数据还可以，为什么跌跌不休？","text":"总市值 162亿 流通市值 153亿 总股本 1.11亿 流通股本 1.04亿 52周最高 214.91 52周最低 144.58 市盈率 26.13 市净率 4.48 股息 0 股息收益率 0.00% ROA 8.04% ROE 20.78% 每股收益 5.61，经营数据还可以，为什么跌跌不休？","html":"总市值 162亿 流通市值 153亿 总股本 1.11亿 流通股本 1.04亿 52周最高 214.91 52周最低 144.58 市盈率 26.13 市净率 4.48 股息 0 股息收益率 0.00% ROA 8.04% ROE 20.78% 每股收益 5.61，经营数据还可以，为什么跌跌不休？"}],"imageCount":0,"langContent":"EN","totalScore":0},{"id":844780603,"gmtCreate":1636460244186,"gmtModify":1636460244259,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"This is a sobering review on Rivian. Whilst the bells and whistles of buying&nbsp;Rivian's shares at IPO is so enticingly magnetic, I urge anyone to just read this before you make any buy decision. Everykey selling point of Rivian is debunked and justified by the writer... and rightly so. I&nbsp;have and I am having second thought on Rivian. Instead I will wait for F to dip and buy in.","listText":"This is a sobering review on Rivian. Whilst the bells and whistles of buying&nbsp;Rivian's shares at IPO is so enticingly magnetic, I urge anyone to just read this before you make any buy decision. Everykey selling point of Rivian is debunked and justified by the writer... and rightly so. I&nbsp;have and I am having second thought on Rivian. Instead I will wait for F to dip and buy in.","text":"This is a sobering review on Rivian. Whilst the bells and whistles of buying Rivian's shares at IPO is so enticingly magnetic, I urge anyone to just read this before you make any buy decision. Everykey selling point of Rivian is debunked and justified by the writer... and rightly so. I have and I am having second thought on Rivian. Instead I will wait for F to dip and buy in.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":1,"link":"https://laohu8.com/post/844780603","repostId":"1174798558","repostType":2,"repost":{"id":"1174798558","kind":"news","pubTimestamp":1636447138,"share":"https://www.laohu8.com/m/news/1174798558?lang=&edition=full","pubTime":"2021-11-09 16:38","market":"us","language":"en","title":"Rivian: Even At A Lowered Valuation, Don't Buy This IPO","url":"https://stock-news.laohu8.com/highlight/detail?id=1174798558","media":"seeking alpha","summary":"Summary\n\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we t","content":"<p>Summary</p>\n<ul>\n <li>Despite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we think investors should avoid the temptation to buy Rivian shares.</li>\n <li>Rivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Tesla vehicles produced during the past 12 months.</li>\n <li>These manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.</li>\n <li>Looking for more investing ideas like this one? Get them exclusively at Value Investing 2.0 .</li>\n</ul>\n<p>Rivian (RIVN)is set to IPO next week with an expected valuation of ~$52 billion, the midpoint of its IPO price range. A $52 billion valuation is well below the $80 billion valuation the company originally sought, but it's still too high.</p>\n<p>Despite the popularity of the electric vehicle market and huge gains in Tesla’s (TSLA) stock, we think investors should avoid the temptation to buy Rivian shares.</p>\n<p>We're skeptical that Rivian’s IPO will deliver for investors even with the lower valuation. Investors shouldn’t buy a stock just because it’s in a hot sector.</p>\n<p>Rivian has yet to manufacture a meaningful number of vehicles and competes with well-capitalized electric vehicle upstarts as well as incumbents like General Motors (GM) and BMW, which both have decades of experience and multi-billion dollar plans to expand EV production.</p>\n<p>Rivian’s $52 billion valuation is about the same as Honda (HMC), which has world-class manufacturing capabilities and is investing heavily in a suite of electric vehicles. It makes no sense for Rivian to IPO with a valuation anywhere near Honda. Maybe, after several years of production and sales on par with Honda, Rivian would deserve a comparable valuation. But, to buy the stock at such a high price before the company has shown it can consistently produce more than a handful of cars seems ridiculous to us.</p>\n<p>Rivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Teslavehicles produced over the past 12 months and 66% more vehicles than Honda sold in the U.S. in 2020.</p>\n<p>These manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.</p>\n<p>Investments from Amazon(NASDAQ:AMZN)and Ford(NYSE:F)do nothing to justify the IPO valuation. Those investments were made at much lower prices and simply position these companies to participate in what appears to be a very lucrative IPO for private investors and owners.</p>\n<p>We believe the stock is worth $13 billion at best – a 75% downside to the midpoint IPO valuation of $52 billion.</p>\n<p>Below, we’ll outline the impracticality of Rivian meeting the expectations baked into the expected IPO valuation.</p>\n<p><b>$52 Billion Valuation Makes No Sense</b></p>\n<p>At its expected valuation of ~$52 billion, Rivian would be valued on par with Honda, a manufacturer that produced more than 4.5 million vehicles worldwide in fiscal 2021, and nearing Stellantis, BMW, and more. See Figure 1. At $1.2 trillion, Tesla’smarket cap is off the chart and is therefore excluded from Figure 1.</p>\n<p><b>Figure 1: Rivian’s Expected Valuation Compared to Competition</b></p>\n<p>Sources: New Constructs, LLC and company filings</p>\n<p><b>At Least Tesla Sold Vehicles Prior to IPO</b></p>\n<p>With no revenue from actual vehicle sales, investors need to understand that Rivian is in its infancy. Unsurprisingly,Core Earningswere -$398 million in 2019 and -$982 million in 2020 and the company burned -$2.5 billion in free cash flow (FCF) in 2020. In other words, the company looks more like a startup than one ready for an IPO. When Tesla went public in 2010 at a valuation of ~$1.7 billion, it was already delivering vehicles, and by the end of 2010, delivered over 1,500 units.</p>\n<p><b>Valuation Implies Rivian Will Take Huge Share of the Global EV Market</b></p>\n<p>With less than 200 deliveries of its R1T vehicle, Rivian doesn’t have significant sales to generate a meaningful average selling pricefor its vehicles. However, if we optimistically assume the starting price of $70,000 for its R1S as its ASP, Rivian’s expected valuation implies the company will sell 1.1 million vehicles in 2030, or 4% of theprojected global EV passenger vehicle marketin 2030.</p>\n<p>Meanwhile, Bloombergreportsthat Rivian is gearing up for production of upwards of 300,000 units, or just one-fourth the production implied by its expected IPO valuation. We think it's unlikely that Rivian will sell such a high volume of vehicles at a $70,000 ASP, and the implied vehicle sales based on lower ASPs look even more impractical.</p>\n<p>Per Figure 2, Rivian’s midpoint IPO valuation implies that, in 2030, it will sell the following number of vehicles based on different ASPs:</p>\n<ul>\n <li>1.1 million vehicles – ASP of $70k (starting price of Rivian’s R1S)</li>\n <li>1.5 million vehicles – ASP of $51k (equal to Tesla over TTM)</li>\n <li>2.0 million vehicles – ASP of $38k (average new car price in the U.S. in 2020)</li>\n <li>4.4 million vehicles – ASP of $17k (equal to General Motors over the TTM)</li>\n</ul>\n<p>If Rivian achieves those EV sales, the implied market share for the company would be the following (assuming global passenger EV sales reach 25.8 million in 2030, thebase case projection from the IEA):</p>\n<ul>\n <li>4% for 1.1 million vehicles</li>\n <li>6% for 1.5 million vehicles</li>\n <li>8% for 2.0 million vehicles</li>\n <li>17% for 4.4 million vehicles</li>\n</ul>\n<p><b>Figure 2: Implied Vehicle Sales in 2030 to Justify Expected Valuation</b></p>\n<p>Sources: New Constructs, LLC and company filings</p>\n<p>Buying stock in any company at a price that implies such huge market share gain is ill-advised, in our opinion.</p>\n<p><b>Doing the Math: $52 Billion Valuation Is Beyond Overvalued</b></p>\n<p>We use our reverse discounted cash flow model to provide more clarity, mathematical evidence that the expected IPO valuation is too high and offers unattractive risk/reward.</p>\n<p>In order to justify the midpoint of its IPO price range, Rivian must:</p>\n<ul>\n <li>Immediately achieve a 6% NOPAT margin (slightly below Tesla’s TTM margin) and</li>\n <li>grow revenue to $74 billion by 2030 (over 1.5x Tesla’s TTM revenue).</li>\n</ul>\n<p>In thisscenario, Rivian would generate $74 billion in revenue in fiscal 2030, which is 57% and 55% of General Motors’and Ford’sTTM revenue. This implied revenue is also used to calculate the implied vehicle sales in Figure 2 above, which are so high they warrant repeating. At an ASP of $70k, this scenario implies Rivian sells ~1.1 million vehicles in 2030, or 4% of the forecasted global EV passenger vehicle market in 2030. For reference, Honda sold 1.2 million vehicles in the U.S. in 2020.</p>\n<p><b>DCF Scenario 2: Growth at 5x Industry Expectations Equals 75% Downside</b></p>\n<p>We review an additional DCF scenario to highlight the downside risk even if Rivian’s revenue grows five times the expected industry growth rate.</p>\n<p>If we assume Rivian:</p>\n<ul>\n <li>immediately achieves a NOPAT margin of 6% and</li>\n <li>grows revenue to $25 billion by 2030, then</li>\n</ul>\n<p>RIVN is worth just $13 billion today – a 75% downside to the midpoint IPO valuation.See the math behind this reverse DCF scenario. In this scenario, Rivian would generate $24.7 billion in revenue in 2030, which is equal to Tesla’s 2019 revenue. At an ASP of $38k, the average new car price in the U.S. in 2020, this scenario implies Rivian sells 650,000vehicles in 2030, which is 110% of the number of Chevrolet Silverado’s sold in 2020 and 83% of the F-150s sold in 2020. For reference, this level of production is also 4x the maximum production capacity of the company’s Normal Factory.</p>\n<p>Based on our reverse DCF model, if the company cannot achieve at least five times the expected industry growth rate, the downside could be as much as 100%.</p>\n<p>Figure 3 compares Rivian’s historical NOPAT to the NOPAT implied by each of the above DCF scenarios. For additional context, we show Tesla’s, Stellantis’ and Ford’s TTM NOPAT. Notably, Honda’s TTM NOPAT, at $6.2 billion, is literally off the chart and is, therefore, excluded from Figure 3.</p>\n<p><b>Figure 3: Rivian’s IPO Valuation is Unreasonably High</b></p>\n<p>Sources: New Constructs, LLC and company filings</p>\n<p>Both of the above scenarios also assume Rivian grows revenue, NOPAT, and FCF without increasing working capital or fixed assets. This assumption is highly unlikely, especially given Rivian will need additional manufacturing plants to reach the production levels implied by its valuation, but allows us to create best-case scenarios that demonstrate the level of expectations embedded in the current valuation.</p>\n<p><b>Roadblocks to Justifying Rivian’s High Valuation</b></p>\n<p>Below, we present a few of the many challenges Rivian faces as it attempts to meet the expectations implied by its expected IPO valuation.</p>\n<p><b>Incumbents Are Coming for the EV Crown</b></p>\n<p>Incumbent automakers are highly profitable and generate billions in free cash flow by leveraging scale and manufacturing expertise. The advantages that incumbents have accumulated in the traditional auto market make their transition to the EV market easier than new entrants like Rivian and Tesla.</p>\n<p>We know from Tesla’s early days (filled with setbacks and delays) that it takes years to develop scale and manufacturing capabilities to routinely deliver a large number of quality vehicles on time. Rivian, despite investments from Ford that could help alleviate some early growing pains,already has delayed deliveryof its flagship vehicles. Any further delays could make some of the company’s pre-ordering customers, which total ~54,000 as of Oct. 31 for its passenger vehicles, look elsewhere. For comparison, Ford announced in October 2021 that it had over 160,000 reservations for its F-150 Lightning.</p>\n<p>In actual manufacturing, and not pre-orders, Ford, Volkswagen, General Motors, and on a smaller level Tesla, have already developed the necessary infrastructure to deliver vehicles at scale. Now, these incumbents are plowing headfirst with ample capital into the EV market, which diminishes Rivian’s ability to take market share. For example:</p>\n<ul>\n <li>Ford, which already introduced its Mustang Mach-E and F-150 Lightning, is increasing EV investments to$30 billionthrough 2025, andrecently announcedmulti-billion dollar battery and EV plants in Tennessee and Kentucky. As recently as May 2021, Ford projects that 40% of its sales, or 2.2 million units based on 2019 (pre-pandemic) sales, will be fully electric by 2030. This level of production would account for 9% of the International Energy Agency’s (IEA)base forecastfor EV sales in 2030.</li>\n <li>Volkswagen, Europe’s largest automaker, plans to invest almost $180 billion into EVs through 2025 and projects that50% of its global saleswill be fully electric by 2030, which would equate to 5.5 million vehicles based on 2019 sales. This number of vehicles would account for 21% of IEA’s base forecast for EV sales in 2030.</li>\n <li>General Motors plans to increase its investment into EVs to$35 billionthrough 2025 and plans to unveil an electric version of its Chevy Silverado in January 2022. General Motors is targeting EV sales of “more than 1 million” by 2025 which would give the company an 8% share of the EV market based on IEA’s base case for 2025.</li>\n <li>Tesla, the current world leader in EV sales, delivered more than 800,000 vehicles through the first three quarters of 2021 and isexpectedto deliver 1.3 million units in 2022. Despite delays, the company plans to introduce its Cybertruck and is in the process of building additional manufacturing plants.</li>\n <li>Stellantis, parent company of Dodge, Jeep, and Ram, recentlyannounceda partnership with LG to procure battery cells in North America and has noted its goals include having a zero-emission vehicle in every SUV segment by 2025.</li>\n</ul>\n<p>Ford, Volkswagen, and General Motors alone are planning to spend at least $245 billion through 2025 and produce nearly 9 million EVs by 2030. These numbers don’t include what other incumbents (Volvo, Honda, Jaguar Land Rover, Porsche, Mercedes, BMW, and more), and other new entrants (NIO, Lucid Motors, Lordstown Motors, and more) will contribute.</p>\n<p>Given that Rivian has not delivered a single vehicle to date, it is clearly chasing the competition at this point, and the competition has billions of dollars to spend to win the race.</p>\n<p><b>Incumbents Have Big Plans for SUVs and Trucks</b></p>\n<p>The incumbent manufacturers aren’t just throwing money at general EV goals or targets either. In fact, they’ve laid out clear plans to provide some of the most popular internal combustion vehicles in an EV format. Below are just some of the expected vehicles coming to the SUV/truck EV market:</p>\n<ul>\n <li>GM Hummer – 2021</li>\n <li>Bollinger B2 – 2021/2022</li>\n <li>Ford Lightning – 2022</li>\n <li>Chevy Silverado EV – 2023</li>\n <li>GMC Sierra EV – 2023</li>\n <li>Tesla Cybertruck – 2022/2023</li>\n <li>Canoo Pickup – 2023</li>\n <li>Ram 1500 Electric – 2024</li>\n</ul>\n<p><b>And Vans are Increasingly Competitive Too</b></p>\n<p>Competition will be fierce in the EV delivery van market as well, as manufacturers providing last-mile delivery trucks and vans look to maintain existing business with new EV platforms. Below are just some of the many delivery vans in production or scheduled for production.</p>\n<ul>\n <li>Fiat e-Ducato – already on sale in Europe</li>\n <li>Nissan e-NV200 – already on sale in Europe</li>\n <li>Ford E Transit – 2022</li>\n <li>BrightDrop EV600 – new GM brand for EV vans – 2022</li>\n <li>Workhorse C1000 – 2022</li>\n <li>Mercedes E Sprinter -already on sale in Europe – late 2023/early 2024 to US</li>\n</ul>\n<p><b>Partnerships Look Overhyped</b></p>\n<p>Many investors may get excited about Rivian’s partnerships with well-known companies like Amazonand Ford. However, when we dig into the details of these partnerships, they’re filled with hype and not much else.</p>\n<p><b>Amazon:</b>In 2019 Rivianannounceda partnership with Amazon Logistics Inc., (referred to in theS-1as “Logistics”) a subsidiary of Amazon which is responsible for last-mile delivery of Amazon’s retail operations. While it's reported that Amazon has ordered 100,000electric delivery vehicles (EDVs) from Rivian, under the terms of the agreement Amazon is under no obligation to actually purchase any vehicles. From the S-1:</p>\n<p>“While the EDV Agreement provides that we will be reimbursed for certain development costs, it does not include any minimum purchase requirements or otherwise restrict Logistics from developing vehicles or collaborating with, or purchasing similar vehicles from, third parties.”</p>\n<p>Additionally, Amazon Logistics has exclusive rights to purchase EDVs from Rivian for four years after the date of first vehicle delivery and a right of first refusal for an additional two years.</p>\n<p>In other words, Rivian cannot sell EDVs to any other company for four years after delivering its first vehicle to Amazon, whether or not Amazon decides to purchase any EDVs at all. The exclusivity clause of this agreement may significantly hamper Rivian’s ability to capture market share and allow more competitors to enter the EDV market uncontested.</p>\n<p><b>Ford:</b>Rivian also made headlines due to the investments from Ford, which now total nearly $800 million in Class B and D preferred stock. In 2019, Rivian entered into a purchase agreement with a Ford subsidiary, Troy Design and Manufacturing Co (referred to as TDM), for the supply of prototype and pre-production vehicles. Now that Rivian’s factory is up and running, it expects to discontinue purchases for this service from TDM.</p>\n<p>However, Rivian is still required to purchase certain key components for its R1 vehicle program exclusively from TDM for the life of the R1 vehicle program. Details on the rest of the partnership are unclear. Ford already cancelled plans to build a Lincoln EV based on Rivian’s platform in2020, stating that “it would be better to focus our development efforts on Lincoln’s own fully electric vehicle.” More recently, Ford executives left Rivian’s board of directors and Ford noted in astatementthat “Rivian is a strategic investment and we're still exploring ways for potential collaboration with them. We don't have anything to announce today.”</p>\n<p>While these partnerships were touted as legitimizing Rivian’s business, in reality, they look more like arms-length equity investments by Amazon and Ford. In its latest 10-Q, Amazon reported a 20% ownership interest in Rivian. In many respects, these partnerships hinder Rivian’s growth and cost model more than they help the company.</p>\n<p><b>Limited Addressable Market: Unable to Sell Cars in 28 States</b></p>\n<p>As of Sept. 30, 2021, Rivian is only allowed to sell its cars in 22 states and the District of Columbia, or less than half of the United States. In the other 28 states, which include the likes of New York, Texas, and New Jersey, Rivian is restricted from obtaining a dealer license to sell within the state (see page 148 of theS-1). While Rivian has shown that it can convince states to allow them to apply for a dealer’s license, it will be a long and expensive process to lobby each state individually.</p>\n<p><b>And Getting Service Could be Troublesome</b></p>\n<p>When it comes to fixing/repairing traditional vehicles, there are any number of options, from DIY, dealers, or auto shops. However, EVs require different repairs and getting service for a Rivian vehicle looks increasingly difficult.</p>\n<p>Eight states outright prohibit Rivian from owning or operating a service center providing warranty service (see page 148 of theS-1). While Rivian does have a plan to address these eight states, the solution is certainly not ideal for customers. Rivian has mobile service units which can be sent from neighboring states to reach customers in prohibited areas, and the company will offer towing services for broken cars to a state with a service location.</p>\n<p>However, as of today, Rivian has only six service centers in four states and only 11 mobile service vehicles (see page 3 of theS-1). For reference, Tesla has nearly 600 store and service locations and a mobile service fleet of nearly 1,100. GM, Ford, and Stellantis have a combined 9,600 dealerships throughout the United States.</p>\n<p>Rivian will need to spend significant capital, i.e. burn more cash, to build out a meaningful service network, or else it could see its service centers overfilled with a backlog of repairs, as we’ve alreadyseen with Tesla, which could damage demand.</p>\n<p><b>Stupid Money Risk Looks Low</b></p>\n<p>Given the multi-billion-dollar investments planned by the incumbents, we believe It's highly unlikely that Rivian will be acquired at its lofty expected valuation. Without delivering more than 200 vehicles, Rivian, at the midpoint of its IPO price range, already has a higher market cap than Honda and Nissan, and nearing Stellantis and BMW.</p>\n<p>Given that each of the competitors has its own manufacturing plants and existing vehicle platforms to leverage and build EVs, an acquisition of Rivian would be an extremely poor use of capital. Any acquirer would essentially be paying a massive premium to purchase the Rivian brand, which is still unproven in the auto market. It would be more cost effective for potential acquirers to compete with Rivian instead of acquiring them.</p>\n<p><b>Other Red Flags for Investors</b></p>\n<p>With a lofty valuation that implies likely unrealistic improvement in both revenue, profits, and market share, investors should be aware that Rivian’s S-1 also includes these other red flags.</p>\n<p><b>Insiders Have Majority Control</b>: Rivian will have multiple classes of common stock, with class A shares sold to the public and class B shares reserved for the founder and affiliates. Rivian discloses in its S-1 that Class A shares will have one vote per share and Class B shares will have 10 votes per share. After the completion of the IPO, the founder and early investors will hold 69% of the voting rights in the company. Amazon alone will hold 17% of the voting power.</p>\n<p>In other words, despite new investors paying a premium to buy the IPO and provide capital to the company, Rivian’s insiders and other owners will continue to control the company, and new shareholders will have little to no control over corporate governance.</p>\n<p><b>No Non-GAAP Metrics, Yet</b>: Many unprofitable companies present non-GAAP metrics to appear more profitable than they really are. However, Rivian discloses no non-GAAP metrics in its entire S-1. However, investors need to be aware that should such disclosure practice change, there is always a risk that non-GAAP metrics could be used to manipulate earnings going forward.</p>\n<p><b>We Don’t Know If We Can Trust the Financials:</b>Investors should take Rivian’s reported numbers with a grain of salt because the company identified a material weakness in its internal control over financial reporting. Specifically, the company identified a deficiency related to “controls to address segregation of duties across financially relevant functions and information technology general controls over tools and applications used in financial reporting.” As an emerging growth company, Rivian is not required to have an independent auditor provide an opinion on internal controls, so we’re glad the company chose to disclose this information.</p>\n<p>However, the company makes no assurances that the issues have been fixed, nor that it has identified all existing material weaknesses. From the S-1:</p>\n<p>“We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time… accordingly, we cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses.”</p>\n<p>Weaknesses in internal controls increase the risk that the company’s financials are fraudulent and/or misleading.</p>\n<p><b>Emerging Growth Status Limits Transparency</b>: By electing to operate as an “Emerging Growth Company,” Rivian is exempt from certain requirements that are beneficial to shareholders. For instance, and as noted above the SEC does not currently require Rivian to have an independent auditor provide an opinion on internal controls. Additionally, Rivian is not required to provide information on executive compensation structure and can delay adoption of certain accounting procedures, which limit the transparency of its financial statements.</p>\n<p><b>Critical Details Found in Financial Filings By OurRobo-Analyst Technology</b></p>\n<p>Below are specifics on the adjustments we make based on Robo-Analyst findings in Rivian’s S-1:</p>\n<p>Income Statement: We made $57 million in adjustments, with a net effect of removing $35 million in non-operating expenses. You can see all the adjustments made to Rivian’s income statementhere.</p>\n<p>Balance Sheet:Wemade $781 million in adjustments to calculate invested capital, with a net effect of decreasing invested capital by $725 million. The most notable adjustment was $3 million in operating leases. This adjustment represented &lt;1% of reported net assets. You can see all the adjustments made to Rivian’s balance sheethere.</p>\n<p>Valuation:Wemade $5.4 billion in adjustments to shareholder value, all of which decreased shareholder value. The largest adjustment to shareholder value was $5.2 billion in preferred capital. This adjustment represents 10% of the midpoint of Rivian’s IPO valuation. You can see all the adjustments made to Rivian’s valuationhere.</p>\n<p><i>This article originally published onNov. 3, 2021.</i></p>\n<p><i>Disclosure: David Trainer, Kyle Guske II, Alex Sword, and Matt Shuler receive no compensation to write about any specific stock, style, or theme.</i></p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Rivian: Even At A Lowered Valuation, Don't Buy This IPO</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nRivian: Even At A Lowered Valuation, Don't Buy This IPO\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-09 16:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4466233-even-at-a-lowered-valuation-dont-buy-rivians-ipo><strong>seeking alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we think investors should avoid the temptation to buy Rivian shares.\nRivian’s $52 billion valuation ...</p>\n\n<a href=\"https://seekingalpha.com/article/4466233-even-at-a-lowered-valuation-dont-buy-rivians-ipo\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"RIVN":"Rivian Automotive, Inc."},"source_url":"https://seekingalpha.com/article/4466233-even-at-a-lowered-valuation-dont-buy-rivians-ipo","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1174798558","content_text":"Summary\n\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we think investors should avoid the temptation to buy Rivian shares.\nRivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Tesla vehicles produced during the past 12 months.\nThese manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.\nLooking for more investing ideas like this one? Get them exclusively at Value Investing 2.0 .\n\nRivian (RIVN)is set to IPO next week with an expected valuation of ~$52 billion, the midpoint of its IPO price range. A $52 billion valuation is well below the $80 billion valuation the company originally sought, but it's still too high.\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s (TSLA) stock, we think investors should avoid the temptation to buy Rivian shares.\nWe're skeptical that Rivian’s IPO will deliver for investors even with the lower valuation. Investors shouldn’t buy a stock just because it’s in a hot sector.\nRivian has yet to manufacture a meaningful number of vehicles and competes with well-capitalized electric vehicle upstarts as well as incumbents like General Motors (GM) and BMW, which both have decades of experience and multi-billion dollar plans to expand EV production.\nRivian’s $52 billion valuation is about the same as Honda (HMC), which has world-class manufacturing capabilities and is investing heavily in a suite of electric vehicles. It makes no sense for Rivian to IPO with a valuation anywhere near Honda. Maybe, after several years of production and sales on par with Honda, Rivian would deserve a comparable valuation. But, to buy the stock at such a high price before the company has shown it can consistently produce more than a handful of cars seems ridiculous to us.\nRivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Teslavehicles produced over the past 12 months and 66% more vehicles than Honda sold in the U.S. in 2020.\nThese manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.\nInvestments from Amazon(NASDAQ:AMZN)and Ford(NYSE:F)do nothing to justify the IPO valuation. Those investments were made at much lower prices and simply position these companies to participate in what appears to be a very lucrative IPO for private investors and owners.\nWe believe the stock is worth $13 billion at best – a 75% downside to the midpoint IPO valuation of $52 billion.\nBelow, we’ll outline the impracticality of Rivian meeting the expectations baked into the expected IPO valuation.\n$52 Billion Valuation Makes No Sense\nAt its expected valuation of ~$52 billion, Rivian would be valued on par with Honda, a manufacturer that produced more than 4.5 million vehicles worldwide in fiscal 2021, and nearing Stellantis, BMW, and more. See Figure 1. At $1.2 trillion, Tesla’smarket cap is off the chart and is therefore excluded from Figure 1.\nFigure 1: Rivian’s Expected Valuation Compared to Competition\nSources: New Constructs, LLC and company filings\nAt Least Tesla Sold Vehicles Prior to IPO\nWith no revenue from actual vehicle sales, investors need to understand that Rivian is in its infancy. Unsurprisingly,Core Earningswere -$398 million in 2019 and -$982 million in 2020 and the company burned -$2.5 billion in free cash flow (FCF) in 2020. In other words, the company looks more like a startup than one ready for an IPO. When Tesla went public in 2010 at a valuation of ~$1.7 billion, it was already delivering vehicles, and by the end of 2010, delivered over 1,500 units.\nValuation Implies Rivian Will Take Huge Share of the Global EV Market\nWith less than 200 deliveries of its R1T vehicle, Rivian doesn’t have significant sales to generate a meaningful average selling pricefor its vehicles. However, if we optimistically assume the starting price of $70,000 for its R1S as its ASP, Rivian’s expected valuation implies the company will sell 1.1 million vehicles in 2030, or 4% of theprojected global EV passenger vehicle marketin 2030.\nMeanwhile, Bloombergreportsthat Rivian is gearing up for production of upwards of 300,000 units, or just one-fourth the production implied by its expected IPO valuation. We think it's unlikely that Rivian will sell such a high volume of vehicles at a $70,000 ASP, and the implied vehicle sales based on lower ASPs look even more impractical.\nPer Figure 2, Rivian’s midpoint IPO valuation implies that, in 2030, it will sell the following number of vehicles based on different ASPs:\n\n1.1 million vehicles – ASP of $70k (starting price of Rivian’s R1S)\n1.5 million vehicles – ASP of $51k (equal to Tesla over TTM)\n2.0 million vehicles – ASP of $38k (average new car price in the U.S. in 2020)\n4.4 million vehicles – ASP of $17k (equal to General Motors over the TTM)\n\nIf Rivian achieves those EV sales, the implied market share for the company would be the following (assuming global passenger EV sales reach 25.8 million in 2030, thebase case projection from the IEA):\n\n4% for 1.1 million vehicles\n6% for 1.5 million vehicles\n8% for 2.0 million vehicles\n17% for 4.4 million vehicles\n\nFigure 2: Implied Vehicle Sales in 2030 to Justify Expected Valuation\nSources: New Constructs, LLC and company filings\nBuying stock in any company at a price that implies such huge market share gain is ill-advised, in our opinion.\nDoing the Math: $52 Billion Valuation Is Beyond Overvalued\nWe use our reverse discounted cash flow model to provide more clarity, mathematical evidence that the expected IPO valuation is too high and offers unattractive risk/reward.\nIn order to justify the midpoint of its IPO price range, Rivian must:\n\nImmediately achieve a 6% NOPAT margin (slightly below Tesla’s TTM margin) and\ngrow revenue to $74 billion by 2030 (over 1.5x Tesla’s TTM revenue).\n\nIn thisscenario, Rivian would generate $74 billion in revenue in fiscal 2030, which is 57% and 55% of General Motors’and Ford’sTTM revenue. This implied revenue is also used to calculate the implied vehicle sales in Figure 2 above, which are so high they warrant repeating. At an ASP of $70k, this scenario implies Rivian sells ~1.1 million vehicles in 2030, or 4% of the forecasted global EV passenger vehicle market in 2030. For reference, Honda sold 1.2 million vehicles in the U.S. in 2020.\nDCF Scenario 2: Growth at 5x Industry Expectations Equals 75% Downside\nWe review an additional DCF scenario to highlight the downside risk even if Rivian’s revenue grows five times the expected industry growth rate.\nIf we assume Rivian:\n\nimmediately achieves a NOPAT margin of 6% and\ngrows revenue to $25 billion by 2030, then\n\nRIVN is worth just $13 billion today – a 75% downside to the midpoint IPO valuation.See the math behind this reverse DCF scenario. In this scenario, Rivian would generate $24.7 billion in revenue in 2030, which is equal to Tesla’s 2019 revenue. At an ASP of $38k, the average new car price in the U.S. in 2020, this scenario implies Rivian sells 650,000vehicles in 2030, which is 110% of the number of Chevrolet Silverado’s sold in 2020 and 83% of the F-150s sold in 2020. For reference, this level of production is also 4x the maximum production capacity of the company’s Normal Factory.\nBased on our reverse DCF model, if the company cannot achieve at least five times the expected industry growth rate, the downside could be as much as 100%.\nFigure 3 compares Rivian’s historical NOPAT to the NOPAT implied by each of the above DCF scenarios. For additional context, we show Tesla’s, Stellantis’ and Ford’s TTM NOPAT. Notably, Honda’s TTM NOPAT, at $6.2 billion, is literally off the chart and is, therefore, excluded from Figure 3.\nFigure 3: Rivian’s IPO Valuation is Unreasonably High\nSources: New Constructs, LLC and company filings\nBoth of the above scenarios also assume Rivian grows revenue, NOPAT, and FCF without increasing working capital or fixed assets. This assumption is highly unlikely, especially given Rivian will need additional manufacturing plants to reach the production levels implied by its valuation, but allows us to create best-case scenarios that demonstrate the level of expectations embedded in the current valuation.\nRoadblocks to Justifying Rivian’s High Valuation\nBelow, we present a few of the many challenges Rivian faces as it attempts to meet the expectations implied by its expected IPO valuation.\nIncumbents Are Coming for the EV Crown\nIncumbent automakers are highly profitable and generate billions in free cash flow by leveraging scale and manufacturing expertise. The advantages that incumbents have accumulated in the traditional auto market make their transition to the EV market easier than new entrants like Rivian and Tesla.\nWe know from Tesla’s early days (filled with setbacks and delays) that it takes years to develop scale and manufacturing capabilities to routinely deliver a large number of quality vehicles on time. Rivian, despite investments from Ford that could help alleviate some early growing pains,already has delayed deliveryof its flagship vehicles. Any further delays could make some of the company’s pre-ordering customers, which total ~54,000 as of Oct. 31 for its passenger vehicles, look elsewhere. For comparison, Ford announced in October 2021 that it had over 160,000 reservations for its F-150 Lightning.\nIn actual manufacturing, and not pre-orders, Ford, Volkswagen, General Motors, and on a smaller level Tesla, have already developed the necessary infrastructure to deliver vehicles at scale. Now, these incumbents are plowing headfirst with ample capital into the EV market, which diminishes Rivian’s ability to take market share. For example:\n\nFord, which already introduced its Mustang Mach-E and F-150 Lightning, is increasing EV investments to$30 billionthrough 2025, andrecently announcedmulti-billion dollar battery and EV plants in Tennessee and Kentucky. As recently as May 2021, Ford projects that 40% of its sales, or 2.2 million units based on 2019 (pre-pandemic) sales, will be fully electric by 2030. This level of production would account for 9% of the International Energy Agency’s (IEA)base forecastfor EV sales in 2030.\nVolkswagen, Europe’s largest automaker, plans to invest almost $180 billion into EVs through 2025 and projects that50% of its global saleswill be fully electric by 2030, which would equate to 5.5 million vehicles based on 2019 sales. This number of vehicles would account for 21% of IEA’s base forecast for EV sales in 2030.\nGeneral Motors plans to increase its investment into EVs to$35 billionthrough 2025 and plans to unveil an electric version of its Chevy Silverado in January 2022. General Motors is targeting EV sales of “more than 1 million” by 2025 which would give the company an 8% share of the EV market based on IEA’s base case for 2025.\nTesla, the current world leader in EV sales, delivered more than 800,000 vehicles through the first three quarters of 2021 and isexpectedto deliver 1.3 million units in 2022. Despite delays, the company plans to introduce its Cybertruck and is in the process of building additional manufacturing plants.\nStellantis, parent company of Dodge, Jeep, and Ram, recentlyannounceda partnership with LG to procure battery cells in North America and has noted its goals include having a zero-emission vehicle in every SUV segment by 2025.\n\nFord, Volkswagen, and General Motors alone are planning to spend at least $245 billion through 2025 and produce nearly 9 million EVs by 2030. These numbers don’t include what other incumbents (Volvo, Honda, Jaguar Land Rover, Porsche, Mercedes, BMW, and more), and other new entrants (NIO, Lucid Motors, Lordstown Motors, and more) will contribute.\nGiven that Rivian has not delivered a single vehicle to date, it is clearly chasing the competition at this point, and the competition has billions of dollars to spend to win the race.\nIncumbents Have Big Plans for SUVs and Trucks\nThe incumbent manufacturers aren’t just throwing money at general EV goals or targets either. In fact, they’ve laid out clear plans to provide some of the most popular internal combustion vehicles in an EV format. Below are just some of the expected vehicles coming to the SUV/truck EV market:\n\nGM Hummer – 2021\nBollinger B2 – 2021/2022\nFord Lightning – 2022\nChevy Silverado EV – 2023\nGMC Sierra EV – 2023\nTesla Cybertruck – 2022/2023\nCanoo Pickup – 2023\nRam 1500 Electric – 2024\n\nAnd Vans are Increasingly Competitive Too\nCompetition will be fierce in the EV delivery van market as well, as manufacturers providing last-mile delivery trucks and vans look to maintain existing business with new EV platforms. Below are just some of the many delivery vans in production or scheduled for production.\n\nFiat e-Ducato – already on sale in Europe\nNissan e-NV200 – already on sale in Europe\nFord E Transit – 2022\nBrightDrop EV600 – new GM brand for EV vans – 2022\nWorkhorse C1000 – 2022\nMercedes E Sprinter -already on sale in Europe – late 2023/early 2024 to US\n\nPartnerships Look Overhyped\nMany investors may get excited about Rivian’s partnerships with well-known companies like Amazonand Ford. However, when we dig into the details of these partnerships, they’re filled with hype and not much else.\nAmazon:In 2019 Rivianannounceda partnership with Amazon Logistics Inc., (referred to in theS-1as “Logistics”) a subsidiary of Amazon which is responsible for last-mile delivery of Amazon’s retail operations. While it's reported that Amazon has ordered 100,000electric delivery vehicles (EDVs) from Rivian, under the terms of the agreement Amazon is under no obligation to actually purchase any vehicles. From the S-1:\n“While the EDV Agreement provides that we will be reimbursed for certain development costs, it does not include any minimum purchase requirements or otherwise restrict Logistics from developing vehicles or collaborating with, or purchasing similar vehicles from, third parties.”\nAdditionally, Amazon Logistics has exclusive rights to purchase EDVs from Rivian for four years after the date of first vehicle delivery and a right of first refusal for an additional two years.\nIn other words, Rivian cannot sell EDVs to any other company for four years after delivering its first vehicle to Amazon, whether or not Amazon decides to purchase any EDVs at all. The exclusivity clause of this agreement may significantly hamper Rivian’s ability to capture market share and allow more competitors to enter the EDV market uncontested.\nFord:Rivian also made headlines due to the investments from Ford, which now total nearly $800 million in Class B and D preferred stock. In 2019, Rivian entered into a purchase agreement with a Ford subsidiary, Troy Design and Manufacturing Co (referred to as TDM), for the supply of prototype and pre-production vehicles. Now that Rivian’s factory is up and running, it expects to discontinue purchases for this service from TDM.\nHowever, Rivian is still required to purchase certain key components for its R1 vehicle program exclusively from TDM for the life of the R1 vehicle program. Details on the rest of the partnership are unclear. Ford already cancelled plans to build a Lincoln EV based on Rivian’s platform in2020, stating that “it would be better to focus our development efforts on Lincoln’s own fully electric vehicle.” More recently, Ford executives left Rivian’s board of directors and Ford noted in astatementthat “Rivian is a strategic investment and we're still exploring ways for potential collaboration with them. We don't have anything to announce today.”\nWhile these partnerships were touted as legitimizing Rivian’s business, in reality, they look more like arms-length equity investments by Amazon and Ford. In its latest 10-Q, Amazon reported a 20% ownership interest in Rivian. In many respects, these partnerships hinder Rivian’s growth and cost model more than they help the company.\nLimited Addressable Market: Unable to Sell Cars in 28 States\nAs of Sept. 30, 2021, Rivian is only allowed to sell its cars in 22 states and the District of Columbia, or less than half of the United States. In the other 28 states, which include the likes of New York, Texas, and New Jersey, Rivian is restricted from obtaining a dealer license to sell within the state (see page 148 of theS-1). While Rivian has shown that it can convince states to allow them to apply for a dealer’s license, it will be a long and expensive process to lobby each state individually.\nAnd Getting Service Could be Troublesome\nWhen it comes to fixing/repairing traditional vehicles, there are any number of options, from DIY, dealers, or auto shops. However, EVs require different repairs and getting service for a Rivian vehicle looks increasingly difficult.\nEight states outright prohibit Rivian from owning or operating a service center providing warranty service (see page 148 of theS-1). While Rivian does have a plan to address these eight states, the solution is certainly not ideal for customers. Rivian has mobile service units which can be sent from neighboring states to reach customers in prohibited areas, and the company will offer towing services for broken cars to a state with a service location.\nHowever, as of today, Rivian has only six service centers in four states and only 11 mobile service vehicles (see page 3 of theS-1). For reference, Tesla has nearly 600 store and service locations and a mobile service fleet of nearly 1,100. GM, Ford, and Stellantis have a combined 9,600 dealerships throughout the United States.\nRivian will need to spend significant capital, i.e. burn more cash, to build out a meaningful service network, or else it could see its service centers overfilled with a backlog of repairs, as we’ve alreadyseen with Tesla, which could damage demand.\nStupid Money Risk Looks Low\nGiven the multi-billion-dollar investments planned by the incumbents, we believe It's highly unlikely that Rivian will be acquired at its lofty expected valuation. Without delivering more than 200 vehicles, Rivian, at the midpoint of its IPO price range, already has a higher market cap than Honda and Nissan, and nearing Stellantis and BMW.\nGiven that each of the competitors has its own manufacturing plants and existing vehicle platforms to leverage and build EVs, an acquisition of Rivian would be an extremely poor use of capital. Any acquirer would essentially be paying a massive premium to purchase the Rivian brand, which is still unproven in the auto market. It would be more cost effective for potential acquirers to compete with Rivian instead of acquiring them.\nOther Red Flags for Investors\nWith a lofty valuation that implies likely unrealistic improvement in both revenue, profits, and market share, investors should be aware that Rivian’s S-1 also includes these other red flags.\nInsiders Have Majority Control: Rivian will have multiple classes of common stock, with class A shares sold to the public and class B shares reserved for the founder and affiliates. Rivian discloses in its S-1 that Class A shares will have one vote per share and Class B shares will have 10 votes per share. After the completion of the IPO, the founder and early investors will hold 69% of the voting rights in the company. Amazon alone will hold 17% of the voting power.\nIn other words, despite new investors paying a premium to buy the IPO and provide capital to the company, Rivian’s insiders and other owners will continue to control the company, and new shareholders will have little to no control over corporate governance.\nNo Non-GAAP Metrics, Yet: Many unprofitable companies present non-GAAP metrics to appear more profitable than they really are. However, Rivian discloses no non-GAAP metrics in its entire S-1. However, investors need to be aware that should such disclosure practice change, there is always a risk that non-GAAP metrics could be used to manipulate earnings going forward.\nWe Don’t Know If We Can Trust the Financials:Investors should take Rivian’s reported numbers with a grain of salt because the company identified a material weakness in its internal control over financial reporting. Specifically, the company identified a deficiency related to “controls to address segregation of duties across financially relevant functions and information technology general controls over tools and applications used in financial reporting.” As an emerging growth company, Rivian is not required to have an independent auditor provide an opinion on internal controls, so we’re glad the company chose to disclose this information.\nHowever, the company makes no assurances that the issues have been fixed, nor that it has identified all existing material weaknesses. From the S-1:\n“We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time… accordingly, we cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses.”\nWeaknesses in internal controls increase the risk that the company’s financials are fraudulent and/or misleading.\nEmerging Growth Status Limits Transparency: By electing to operate as an “Emerging Growth Company,” Rivian is exempt from certain requirements that are beneficial to shareholders. For instance, and as noted above the SEC does not currently require Rivian to have an independent auditor provide an opinion on internal controls. Additionally, Rivian is not required to provide information on executive compensation structure and can delay adoption of certain accounting procedures, which limit the transparency of its financial statements.\nCritical Details Found in Financial Filings By OurRobo-Analyst Technology\nBelow are specifics on the adjustments we make based on Robo-Analyst findings in Rivian’s S-1:\nIncome Statement: We made $57 million in adjustments, with a net effect of removing $35 million in non-operating expenses. You can see all the adjustments made to Rivian’s income statementhere.\nBalance Sheet:Wemade $781 million in adjustments to calculate invested capital, with a net effect of decreasing invested capital by $725 million. The most notable adjustment was $3 million in operating leases. This adjustment represented <1% of reported net assets. You can see all the adjustments made to Rivian’s balance sheethere.\nValuation:Wemade $5.4 billion in adjustments to shareholder value, all of which decreased shareholder value. The largest adjustment to shareholder value was $5.2 billion in preferred capital. This adjustment represents 10% of the midpoint of Rivian’s IPO valuation. You can see all the adjustments made to Rivian’s valuationhere.\nThis article originally published onNov. 3, 2021.\nDisclosure: David Trainer, Kyle Guske II, Alex Sword, and Matt Shuler receive no compensation to write about any specific stock, style, or theme.","news_type":1},"isVote":1,"tweetType":1,"viewCount":706,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":844784547,"gmtCreate":1636460897451,"gmtModify":1636460913079,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"Amazon has a non binding 100k order of it's electric van. And if anyone thinks the Rivian can outperform a Ford F150 lightning in terms of order and deliverables... I would think again. And by the time any Rivian is on the road, most major brands would already have heirs and with proven production capabilities to boost.","listText":"Amazon has a non binding 100k order of it's electric van. And if anyone thinks the Rivian can outperform a Ford F150 lightning in terms of order and deliverables... I would think again. And by the time any Rivian is on the road, most major brands would already have heirs and with proven production capabilities to boost.","text":"Amazon has a non binding 100k order of it's electric van. And if anyone thinks the Rivian can outperform a Ford F150 lightning in terms of order and deliverables... I would think again. And by the time any Rivian is on the road, most major brands would already have heirs and with proven production capabilities to boost.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":3,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/844784547","repostId":"2182270315","repostType":4,"repost":{"id":"2182270315","kind":"news","pubTimestamp":1636440901,"share":"https://www.laohu8.com/m/news/2182270315?lang=&edition=full","pubTime":"2021-11-09 14:55","market":"us","language":"en","title":"Rivian IPO Puts Slow Race to Commercial EV to Public Market Test","url":"https://stock-news.laohu8.com/highlight/detail?id=2182270315","media":"Bloomberg","summary":"(Bloomberg) -- Eleven years after Tesla Inc. went public with a market value of less than $2 billion","content":"<p>(Bloomberg) -- Eleven years after Tesla Inc. went public with a market value of less than $2 billion, <a href=\"https://laohu8.com/S/AONE.U\">one</a> of its most closely watched competitors is following in its tire treads with a much richer valuation.&nbsp;Electric-truckmaker Rivian Automotive Inc. will price its initial public offering on Tuesday&nbsp;and&nbsp;start trading Wednesday, seeking to raise as much as $10 billion in a listing that could give it a fully diluted valuation of more than $70 billion. If shares are sold at the top of their marketed range, it’ll be the seventh-biggest U.S. IPO on record, data compiled by Bloomberg show.</p>\n<p>Investors will be buying into the promise of a class of EVs that mirror the gas-powered vehicles that dominate the passenger market: larger, bulkier vans and pickup trucks that are a sharp contrast to Tesla’s sleeker sedans. The company also has Amazon.com Inc.’s backing – the internet giant owns a 20% stake in Rivian and has placed an order for 100,000 of its delivery vans.</p>\n<p>As is the case with many richly valued startups, they’ll also be buying into ambitious growth plans. Rivian delivered its first vehicles just a couple of months ago and will only produce about 1,200 units by year-end at its plant in Normal, Illinois. The company estimates that annual production will hit 150,000 vehicles at its main facility by late 2023.</p>\n<p>While demand for Rivian’s products will likely outweigh supply for a number of years, the company faces a “natural ceiling” of 300,000 to 400,000 units per year, New Street Research analyst Pierre Ferragu wrote in a note Monday. That’s partly down to price: Rivian’s R1T truck starts at $67,500 for the most basic model, while its upcoming sport utility model is $70,000.</p>\n<p>“Above $70,000, the global addressable market for Rivian’s SUV and pickup is less than 1.5 million units, and it will be a crowded space,” Ferragu wrote.</p>\n<p>Stealth Mode</p>\n<p>Though it’s a newcomer to the public market, Irvine, California-based Rivian’s entry into the world of consumer electric vehicles has been more than a decade in the making.</p>\n<p>Founder and Chief Executive Officer R.J. Scaringe set-up the first iteration of what would become Rivian in 2009 in his home state of Florida.</p>\n<p>Early work centered around a smaller sports car, which was later shelved in favor of a rugged pickup at the direction of early investor Mohammed Abdul Latif Jameel.</p>\n<p>The company remained in stealth mode for almost 10 years, until the Los Angeles Auto Show in 2018 where Scaringe, who holds a doctorate from the Massachusetts Institute of Technology, showed his battery-electric pickup and SUV to the public for the first time.</p>\n<p>Read more: Rivian’s Long, Messy Road to Its First Electric Pickup Truck</p>\n<p>With deliveries having finally started in September, Rivian is the first automaker to bring a battery-electric pickup to market in the U.S. It’s also on track to make the most of its first-mover advantage when it starts deliveries of the R1S sport utility vehicle this year, giving it a lead in the market for full-size battery-electric SUVs.</p>\n<p>Competition, Amazon</p>\n<p>When competition arrives, it will be plentiful -- and often cheaper. Ford Motor Co. has more than 160,000 non-binding reservations for its F-150 Lightning, the electrified version of its best-selling pickup that starts around $40,000, though it doesn’t go on sale until next spring.</p>\n<p>General Motors Co., which walked away from potentially buying a stake in Rivian in 2019, will debut an EV pickup version of its iconic Hummer this fall. It also plans to unveil an EV version of the Silverado pickup at Consumer Electronics Show in January.&nbsp;Tesla, meanwhile, plans to start production on its futuristic Cybertruck pickup late next year at its new plant in Austin, Texas.</p>\n<p>Much of the recent optimism around Rivian’s potential valuation comes from Amazon’s backing of the automaker, and particularly its order for 100,000 electric delivery vans by the end of the decade.</p>\n<p>The deal for the vans is seen as a point of differentiation for Rivian, giving it some insulation from economic downturns that could hit consumer appetites for passenger EVs. Scaringe has prioritized building hundreds of delivery vans this year, people familiar with the plan told Bloomberg News in October, even though Amazon is under no obligation to actually buy any of them. Amazon Shapes Rivian’s Future and Hopes for $80 Billion IPO (1)</p>\n<p>Under the terms of the agreement, Seattle, Washington-based Amazon has exclusive rights to Rivian’s vans for a period of four years, with right of first refusal on all vans produced for another two years after that. Amazon is also permitted to work with other automakers on electric delivery vans.</p>\n<p>‘Next Tesla’</p>\n<p>“Rivian’s premium market valuation reflects its ownership of the entire value chain and freedom to innovate without dealing with stranded assets,” Pitchbook senior mobility analyst Asad Hussain said. “Between Rivian and Lucid, the market finally has credible candidates for ‘the next Tesla.’”</p>\n<p>Elon Musk’s Tesla, which recently joined the trillion-dollar-valuation club, might have its own ideas about that.</p>\n<p>A legal fight between the companies ramped up last month over Tesla’s claims that Rivian was poaching employees and, in the process, stealing “highly proprietary” battery technology. Rivian denied the claims, which it had accused Tesla in August 2020 of making up to stop employees leaving, and to stifle the growth of competitors.</p>\n<p>If Rivian hits, or exceeds, the market valuation of $63 billion that it’s aiming for in its IPO -- excluding employee stock options and restricted stock units -- it would eclipse decades-old automakers such as Japan’s Honda Motor Co., valued at about $53 billion, and France’s Renault SA at $11 billion.&nbsp;A first-day rally in the shares, which have characterized several recent IPOs by well-known companies, could see Rivian’s valuation top that of Ford, General Motors and fellow EV maker <a href=\"https://laohu8.com/S/LCID\">Lucid Group Inc</a>., which went public via a blank-check company in July and is now worth about $74 billion. Rivian was last valued at $27.6 billion in a funding round in January, Bloomberg News reported.</p>\n<p>Rivian plans to use the proceeds from its IPO for working capital, to fund growth and for other general corporate purposes, according to its listing paperwork. As well as ramping up hiring and increasing the volume of materials bought from its supply chain to meet demand, the company is also planning to build a second U.S. factory and is in talks with the city of Fort Worth, Texas, to invest $5 billion in a plant there. Rivian’s also eyeing a third factory in Europe, Bloomberg reported in January.</p>\n<p>The company had a net loss of $994 million in the first six months of 2021, compared with a $377 million deficit a year earlier, according to its filings. It expects to record a quarterly net loss of up to $1.28 billion due to costs associated with the start of production of the R1T.</p>\n<p><a href=\"https://laohu8.com/S/MSTLW\">Morgan Stanley</a>, Goldman Sachs Group Inc. and JPMorgan Chase &amp; Co. -- the same trio who lined up to take Tesla public -- are leading the offering. The company’s shares will trade on the Nasdaq Global Select Market under the symbol RIVN.</p>","source":"yahoofinance","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Rivian IPO Puts Slow Race to Commercial EV to Public Market Test</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nRivian IPO Puts Slow Race to Commercial EV to Public Market Test\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-09 14:55 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/rivian-ipo-puts-slow-race-050001996.html><strong>Bloomberg</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>(Bloomberg) -- Eleven years after Tesla Inc. went public with a market value of less than $2 billion, one of its most closely watched competitors is following in its tire treads with a much richer ...</p>\n\n<a href=\"https://finance.yahoo.com/news/rivian-ipo-puts-slow-race-050001996.html\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{},"source_url":"https://finance.yahoo.com/news/rivian-ipo-puts-slow-race-050001996.html","is_english":true,"share_image_url":"https://static.laohu8.com/5f26f4a48f9cb3e29be4d71d3ba8c038","article_id":"2182270315","content_text":"(Bloomberg) -- Eleven years after Tesla Inc. went public with a market value of less than $2 billion, one of its most closely watched competitors is following in its tire treads with a much richer valuation. Electric-truckmaker Rivian Automotive Inc. will price its initial public offering on Tuesday and start trading Wednesday, seeking to raise as much as $10 billion in a listing that could give it a fully diluted valuation of more than $70 billion. If shares are sold at the top of their marketed range, it’ll be the seventh-biggest U.S. IPO on record, data compiled by Bloomberg show.\nInvestors will be buying into the promise of a class of EVs that mirror the gas-powered vehicles that dominate the passenger market: larger, bulkier vans and pickup trucks that are a sharp contrast to Tesla’s sleeker sedans. The company also has Amazon.com Inc.’s backing – the internet giant owns a 20% stake in Rivian and has placed an order for 100,000 of its delivery vans.\nAs is the case with many richly valued startups, they’ll also be buying into ambitious growth plans. Rivian delivered its first vehicles just a couple of months ago and will only produce about 1,200 units by year-end at its plant in Normal, Illinois. The company estimates that annual production will hit 150,000 vehicles at its main facility by late 2023.\nWhile demand for Rivian’s products will likely outweigh supply for a number of years, the company faces a “natural ceiling” of 300,000 to 400,000 units per year, New Street Research analyst Pierre Ferragu wrote in a note Monday. That’s partly down to price: Rivian’s R1T truck starts at $67,500 for the most basic model, while its upcoming sport utility model is $70,000.\n“Above $70,000, the global addressable market for Rivian’s SUV and pickup is less than 1.5 million units, and it will be a crowded space,” Ferragu wrote.\nStealth Mode\nThough it’s a newcomer to the public market, Irvine, California-based Rivian’s entry into the world of consumer electric vehicles has been more than a decade in the making.\nFounder and Chief Executive Officer R.J. Scaringe set-up the first iteration of what would become Rivian in 2009 in his home state of Florida.\nEarly work centered around a smaller sports car, which was later shelved in favor of a rugged pickup at the direction of early investor Mohammed Abdul Latif Jameel.\nThe company remained in stealth mode for almost 10 years, until the Los Angeles Auto Show in 2018 where Scaringe, who holds a doctorate from the Massachusetts Institute of Technology, showed his battery-electric pickup and SUV to the public for the first time.\nRead more: Rivian’s Long, Messy Road to Its First Electric Pickup Truck\nWith deliveries having finally started in September, Rivian is the first automaker to bring a battery-electric pickup to market in the U.S. It’s also on track to make the most of its first-mover advantage when it starts deliveries of the R1S sport utility vehicle this year, giving it a lead in the market for full-size battery-electric SUVs.\nCompetition, Amazon\nWhen competition arrives, it will be plentiful -- and often cheaper. Ford Motor Co. has more than 160,000 non-binding reservations for its F-150 Lightning, the electrified version of its best-selling pickup that starts around $40,000, though it doesn’t go on sale until next spring.\nGeneral Motors Co., which walked away from potentially buying a stake in Rivian in 2019, will debut an EV pickup version of its iconic Hummer this fall. It also plans to unveil an EV version of the Silverado pickup at Consumer Electronics Show in January. Tesla, meanwhile, plans to start production on its futuristic Cybertruck pickup late next year at its new plant in Austin, Texas.\nMuch of the recent optimism around Rivian’s potential valuation comes from Amazon’s backing of the automaker, and particularly its order for 100,000 electric delivery vans by the end of the decade.\nThe deal for the vans is seen as a point of differentiation for Rivian, giving it some insulation from economic downturns that could hit consumer appetites for passenger EVs. Scaringe has prioritized building hundreds of delivery vans this year, people familiar with the plan told Bloomberg News in October, even though Amazon is under no obligation to actually buy any of them. Amazon Shapes Rivian’s Future and Hopes for $80 Billion IPO (1)\nUnder the terms of the agreement, Seattle, Washington-based Amazon has exclusive rights to Rivian’s vans for a period of four years, with right of first refusal on all vans produced for another two years after that. Amazon is also permitted to work with other automakers on electric delivery vans.\n‘Next Tesla’\n“Rivian’s premium market valuation reflects its ownership of the entire value chain and freedom to innovate without dealing with stranded assets,” Pitchbook senior mobility analyst Asad Hussain said. “Between Rivian and Lucid, the market finally has credible candidates for ‘the next Tesla.’”\nElon Musk’s Tesla, which recently joined the trillion-dollar-valuation club, might have its own ideas about that.\nA legal fight between the companies ramped up last month over Tesla’s claims that Rivian was poaching employees and, in the process, stealing “highly proprietary” battery technology. Rivian denied the claims, which it had accused Tesla in August 2020 of making up to stop employees leaving, and to stifle the growth of competitors.\nIf Rivian hits, or exceeds, the market valuation of $63 billion that it’s aiming for in its IPO -- excluding employee stock options and restricted stock units -- it would eclipse decades-old automakers such as Japan’s Honda Motor Co., valued at about $53 billion, and France’s Renault SA at $11 billion. A first-day rally in the shares, which have characterized several recent IPOs by well-known companies, could see Rivian’s valuation top that of Ford, General Motors and fellow EV maker Lucid Group Inc., which went public via a blank-check company in July and is now worth about $74 billion. Rivian was last valued at $27.6 billion in a funding round in January, Bloomberg News reported.\nRivian plans to use the proceeds from its IPO for working capital, to fund growth and for other general corporate purposes, according to its listing paperwork. As well as ramping up hiring and increasing the volume of materials bought from its supply chain to meet demand, the company is also planning to build a second U.S. factory and is in talks with the city of Fort Worth, Texas, to invest $5 billion in a plant there. Rivian’s also eyeing a third factory in Europe, Bloomberg reported in January.\nThe company had a net loss of $994 million in the first six months of 2021, compared with a $377 million deficit a year earlier, according to its filings. It expects to record a quarterly net loss of up to $1.28 billion due to costs associated with the start of production of the R1T.\nMorgan Stanley, Goldman Sachs Group Inc. and JPMorgan Chase & Co. -- the same trio who lined up to take Tesla public -- are leading the offering. The company’s shares will trade on the Nasdaq Global Select Market under the symbol RIVN.","news_type":1},"isVote":1,"tweetType":1,"viewCount":870,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":842493177,"gmtCreate":1636212081124,"gmtModify":1636212081260,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"Starbucks' high debt is a concern that makes me the contrarian in this faceoff. I go with DIS.","listText":"Starbucks' high debt is a concern that makes me the contrarian in this faceoff. I go with DIS.","text":"Starbucks' high debt is a concern that makes me the contrarian in this faceoff. I go with DIS.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/842493177","repostId":"1156284404","repostType":2,"repost":{"id":"1156284404","kind":"news","pubTimestamp":1636121042,"share":"https://www.laohu8.com/m/news/1156284404?lang=&edition=full","pubTime":"2021-11-05 22:04","market":"us","language":"en","title":"Better Buy: Disney vs. Starbucks","url":"https://stock-news.laohu8.com/highlight/detail?id=1156284404","media":"Motley Fool ","summary":"Both have strong brands, but one gets the nod.","content":"<p>It is always difficult to choose between two high-quality companies. Ideally, you might like to purchase both. Yet, frequently investing comes down to where to put your hard-earned money.</p>\n<p>That's the case with&nbsp;<b>Walt Disney</b>&nbsp;and&nbsp;<b>Starbucks</b>. Both stocks have had a challenging 2021. Disney's share price is down 6%, while Starbucks' stock has dropped by 5%. This comes as the&nbsp;<b>S&amp;P 500</b>&nbsp;has risen by 24% during that time.</p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/92d7cd6a38784299fa1cce99ae01a4cd\" tg-width=\"2000\" tg-height=\"1333\" width=\"100%\" height=\"auto\"><span>IMAGE SOURCE: GETTY IMAGES.</span></p>\n<p>However, both offer investors solid long-term growth prospects. The question is: Which one is the better investment right now?</p>\n<p><b>Starbucks</b></p>\n<p>Investors clearly didn't like Starbucks' latest quarterly earnings report. Following the late-October release, they sent the stock down by 6% to about $106. The issue stemmed from&nbsp;higher costs&nbsp;that will likely continue weighing on near-term profitability.</p>\n<p>In the latest quarter, Starbucks' operating margin under&nbsp;U.S. generally accepted accounting principles(GAAP) more than doubled to 18.2%. But for next year, management expects a 17% margin, largely due to higher wages. While this is below its 18% to 19% long-term target, I believe this will prove temporary.</p>\n<p>That's because Starbucks continues to post strong sales growth. That will help the company increase prices and leverage expenses.</p>\n<p>Starbucks' quarterly revenue rose by 31% to $8.1 billion, driven by new restaurant openings and a 17% increase in same-store sales. For fiscal 2022, management expects a high single-digit percentage increase in comps and to open 2,000 restaurants, mostly outside of the U.S. It anticipates these will lead to revenue of $32.5 billion to $33 billion,</p>\n<p>In short, demand for Starbucks' products, which took a pause during the pandemic due to store closures, remains strong.</p>\n<p><b>Walt Disney</b></p>\n<p>Disney's shares have fallen this year due to concerns about&nbsp;slowing growth at Disney+, its streaming service. As it grew by leaps and bounds during the pandemic, I'm not concerned.</p>\n<p>After all, Disney+ had 116 million paid subscribers at the start of July 2021, compared to 103.6 million in April. This is also more than double the 57.5 million from a year ago.</p>\n<p>While it may not have the supersonic growth of the past, Disney+ is still adding subscribers at a nice pace. What's more, Disney is far more than a streaming service. Its vast media empire includes parks, movies, several television networks, and retail stores.</p>\n<p>This helps the company produce strong results, even if one part of the business slows. For instance, this year saw the return of live sports that helped its ESPN network, and theme parks reopened. Its quarterly revenue grew by 45% to $17 billion year over year.</p>\n<p>With popular media properties, such as a stable of Marvel characters and movies, the future looks bright for Disney. That's because it has highly recognized and well-regarded brands that have proven their staying power. Management has strengthened its position, including buying Twenty-First Century Fox a couple of years ago, which added television networks, Marvel characters, and provided a controlling interest in the streaming service Hulu.</p>\n<p>After examining both companies, both have strong brands that attract a lot of people. For me, the edge goes to Starbucks, since it has increased dividends since 2010, including during the pandemic. It's nice to receive the income, and it's a positive sign that management and the board of directors have confidence in the future.</p>\n<p>Unfortunately, Disney suspended its dividend last year. While that's certainly understandable given the uncertainty created by the pandemic, it does give a leg up to Starbucks, which saw fit to increase payments.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Better Buy: Disney vs. Starbucks</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nBetter Buy: Disney vs. Starbucks\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-05 22:04 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://www.fool.com/investing/2021/11/05/better-buy-disney-vs-starbucks/><strong>Motley Fool </strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>It is always difficult to choose between two high-quality companies. Ideally, you might like to purchase both. Yet, frequently investing comes down to where to put your hard-earned money.\nThat's the ...</p>\n\n<a href=\"https://www.fool.com/investing/2021/11/05/better-buy-disney-vs-starbucks/\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"DIS":"迪士尼","SBUX":"星巴克"},"source_url":"https://www.fool.com/investing/2021/11/05/better-buy-disney-vs-starbucks/","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1156284404","content_text":"It is always difficult to choose between two high-quality companies. Ideally, you might like to purchase both. Yet, frequently investing comes down to where to put your hard-earned money.\nThat's the case with Walt Disney and Starbucks. Both stocks have had a challenging 2021. Disney's share price is down 6%, while Starbucks' stock has dropped by 5%. This comes as the S&P 500 has risen by 24% during that time.\nIMAGE SOURCE: GETTY IMAGES.\nHowever, both offer investors solid long-term growth prospects. The question is: Which one is the better investment right now?\nStarbucks\nInvestors clearly didn't like Starbucks' latest quarterly earnings report. Following the late-October release, they sent the stock down by 6% to about $106. The issue stemmed from higher costs that will likely continue weighing on near-term profitability.\nIn the latest quarter, Starbucks' operating margin under U.S. generally accepted accounting principles(GAAP) more than doubled to 18.2%. But for next year, management expects a 17% margin, largely due to higher wages. While this is below its 18% to 19% long-term target, I believe this will prove temporary.\nThat's because Starbucks continues to post strong sales growth. That will help the company increase prices and leverage expenses.\nStarbucks' quarterly revenue rose by 31% to $8.1 billion, driven by new restaurant openings and a 17% increase in same-store sales. For fiscal 2022, management expects a high single-digit percentage increase in comps and to open 2,000 restaurants, mostly outside of the U.S. It anticipates these will lead to revenue of $32.5 billion to $33 billion,\nIn short, demand for Starbucks' products, which took a pause during the pandemic due to store closures, remains strong.\nWalt Disney\nDisney's shares have fallen this year due to concerns about slowing growth at Disney+, its streaming service. As it grew by leaps and bounds during the pandemic, I'm not concerned.\nAfter all, Disney+ had 116 million paid subscribers at the start of July 2021, compared to 103.6 million in April. This is also more than double the 57.5 million from a year ago.\nWhile it may not have the supersonic growth of the past, Disney+ is still adding subscribers at a nice pace. What's more, Disney is far more than a streaming service. Its vast media empire includes parks, movies, several television networks, and retail stores.\nThis helps the company produce strong results, even if one part of the business slows. For instance, this year saw the return of live sports that helped its ESPN network, and theme parks reopened. Its quarterly revenue grew by 45% to $17 billion year over year.\nWith popular media properties, such as a stable of Marvel characters and movies, the future looks bright for Disney. That's because it has highly recognized and well-regarded brands that have proven their staying power. Management has strengthened its position, including buying Twenty-First Century Fox a couple of years ago, which added television networks, Marvel characters, and provided a controlling interest in the streaming service Hulu.\nAfter examining both companies, both have strong brands that attract a lot of people. For me, the edge goes to Starbucks, since it has increased dividends since 2010, including during the pandemic. It's nice to receive the income, and it's a positive sign that management and the board of directors have confidence in the future.\nUnfortunately, Disney suspended its dividend last year. While that's certainly understandable given the uncertainty created by the pandemic, it does give a leg up to Starbucks, which saw fit to increase payments.","news_type":1},"isVote":1,"tweetType":1,"viewCount":795,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":840476143,"gmtCreate":1635681482769,"gmtModify":1635682019055,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"Jim Cramer just renamed FAANG into MAMAA. Meta Apple Microsoft Amazon Alphabet.","listText":"Jim Cramer just renamed FAANG into MAMAA. Meta Apple Microsoft Amazon Alphabet.","text":"Jim Cramer just renamed FAANG into MAMAA. Meta Apple Microsoft Amazon Alphabet.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/840476143","repostId":"2179210354","repostType":2,"repost":{"id":"2179210354","kind":"news","pubTimestamp":1635506789,"share":"https://www.laohu8.com/m/news/2179210354?lang=&edition=full","pubTime":"2021-10-29 19:26","market":"us","language":"en","title":"Facebook's Mark Zuckerberg just ruined one of the biggest investing abbreviations ever","url":"https://stock-news.laohu8.com/highlight/detail?id=2179210354","media":"Yahoo Finance","summary":"Facebook(FB). Apple. Amazon. Netflix. Google. Five Big Tech giants known in investing circles simply","content":"<p>Facebook(FB). Apple. Amazon. Netflix. Google. Five Big Tech giants known in investing circles simply as FAANG for years.</p>\n<p>That was until Mark Zuckerberg channeled his inner meta on Thursday.</p>\n<p>The FAANG investing acronym was created in 2013 by Jim Cramer, the founder of TheStreet (full disclosure, my former boss who also created the term \"Cloud Kings\"). It was both catchy as hell and true to form for the companies it represented.</p>\n<p>Think of a fang on a rabid dog and it's not unlike all five tech giants shredding the throats of inferior companies across the spectrum. And because of that ferocity leading to eye-popping profits almost every single quarter (except Amazon on Thursday night), fang also reflected the aggressive nature of the stock prices of all five tech beasts.</p>\n<p>FAANG as an investment has just worked incredibly well in popular investing culture, and financially speaking.</p>\n<p>The NYSE FANG Index — which tracks mostly the performance of these companies — has returned a sterling 455% over the past five years. Facebook — the first name in the investing acronym —has gained 163% in five years time.</p>\n<p>Collectively, the five FAANG stocks have appreciated an average of 322% in the past five years.</p>\n<p>Impressive stuff.</p>\n<p>But now all the investing fun here is done because of Zuck.</p>\n<p>Come Dec. 1, Facebook will officially change its name to Metaverse. New ticker symbol: MVRS.</p>\n<p>So get ready to usher in the era of MAANG. We hope it will prove as fruitful as the soon to be deceased FAANG.</p>","source":"yahoofinance","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Facebook's Mark Zuckerberg just ruined one of the biggest investing abbreviations ever</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nFacebook's Mark Zuckerberg just ruined one of the biggest investing abbreviations ever\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-10-29 19:26 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/facebooks-mark-zuckerberg-just-ruined-one-of-the-biggest-investing-abbreviations-ever-111723613.html><strong>Yahoo Finance</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Facebook(FB). Apple. Amazon. Netflix. Google. Five Big Tech giants known in investing circles simply as FAANG for years.\nThat was until Mark Zuckerberg channeled his inner meta on Thursday.\nThe FAANG ...</p>\n\n<a href=\"https://finance.yahoo.com/news/facebooks-mark-zuckerberg-just-ruined-one-of-the-biggest-investing-abbreviations-ever-111723613.html\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"MSFT":"微软","AAPL":"苹果","GOOG":"谷歌","CRM":"赛富时","AMZN":"亚马逊","GOOGL":"谷歌A","NFLX":"奈飞"},"source_url":"https://finance.yahoo.com/news/facebooks-mark-zuckerberg-just-ruined-one-of-the-biggest-investing-abbreviations-ever-111723613.html","is_english":true,"share_image_url":"https://static.laohu8.com/5f26f4a48f9cb3e29be4d71d3ba8c038","article_id":"2179210354","content_text":"Facebook(FB). Apple. Amazon. Netflix. Google. Five Big Tech giants known in investing circles simply as FAANG for years.\nThat was until Mark Zuckerberg channeled his inner meta on Thursday.\nThe FAANG investing acronym was created in 2013 by Jim Cramer, the founder of TheStreet (full disclosure, my former boss who also created the term \"Cloud Kings\"). It was both catchy as hell and true to form for the companies it represented.\nThink of a fang on a rabid dog and it's not unlike all five tech giants shredding the throats of inferior companies across the spectrum. And because of that ferocity leading to eye-popping profits almost every single quarter (except Amazon on Thursday night), fang also reflected the aggressive nature of the stock prices of all five tech beasts.\nFAANG as an investment has just worked incredibly well in popular investing culture, and financially speaking.\nThe NYSE FANG Index — which tracks mostly the performance of these companies — has returned a sterling 455% over the past five years. Facebook — the first name in the investing acronym —has gained 163% in five years time.\nCollectively, the five FAANG stocks have appreciated an average of 322% in the past five years.\nImpressive stuff.\nBut now all the investing fun here is done because of Zuck.\nCome Dec. 1, Facebook will officially change its name to Metaverse. New ticker symbol: MVRS.\nSo get ready to usher in the era of MAANG. We hope it will prove as fruitful as the soon to be deceased FAANG.","news_type":1},"isVote":1,"tweetType":1,"viewCount":785,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":841306387,"gmtCreate":1635874814916,"gmtModify":1635874814916,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"Set my eyes on this ticker","listText":"Set my eyes on this ticker","text":"Set my eyes on this ticker","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/841306387","repostId":"1129056623","repostType":2,"repost":{"id":"1129056623","kind":"news","pubTimestamp":1635817478,"share":"https://www.laohu8.com/m/news/1129056623?lang=&edition=full","pubTime":"2021-11-02 09:44","market":"us","language":"en","title":"Electric vehicle maker Rivian seeks to raise $8.4 billion in IPO","url":"https://stock-news.laohu8.com/highlight/detail?id=1129056623","media":"TechCrunch","summary":"Electric vehicle startup Rivian hopes to raise up $8.4 billion in its initial public offering, accor","content":"<p>Electric vehicle startup Rivian hopes to raise up $8.4 billion in its initial public offering, according to aregulatory filing&nbsp;posted Monday.</p>\n<p>The company, which is backed by Amazon, said in the filing that it plans to offer 135 million shares at a price between $57 and $62. Underwriters also have an option to buy up to 20.25 million additional shares. If underwriters exercise that option, Rivian would raise as much as $9.6 billion.</p>\n<p>Based on the number of outstanding shares, that would put its market valuation at about $53 billion. If employee stock options and other restricted shares are considered, Rivian's valuation could be as high as $60 billion.</p>\n<p>Rivian filed October 1 to become a&nbsp;publicly traded company&nbsp;in the United States. The S-1 document did not disclose the targeted share price at the time. An amended document filed Monday provided the new information, which included interest from repeat backer Amazon and newcomer Blackstone in Rivian.</p>\n<p>Amazon, funds and accounts advised by T. Rowe Price Associates, Coatue Management, Franklin Templeton, Capital Research Global Investors, D1 Capital Partners LP, Third Point LLC, funds affiliated with Blackstone Alternative Asset Management, Dragoneer Investment Group LLC and certain entities affiliated with Soros Fund Management LLC have indicated an interest in buying up to $5 billion of shares of Class A common stock.</p>\n<p>A recent filing by Amazon shows the e-commerce giant already holds a&nbsp;20% stake in Rivian.</p>\n<p>Rivian's filing was been one of the most anticipated of the year; now attention has turned to its public debut on the Nasdaq exchange. Rivian will trade under the ticker symbol RIVN.</p>","source":"lsy1602557183277","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Electric vehicle maker Rivian seeks to raise $8.4 billion in IPO</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nElectric vehicle maker Rivian seeks to raise $8.4 billion in IPO\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-02 09:44 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://finance.yahoo.com/news/electric-vehicle-maker-rivian-seeks-231423387.html><strong>TechCrunch</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Electric vehicle startup Rivian hopes to raise up $8.4 billion in its initial public offering, according to aregulatory filing posted Monday.\nThe company, which is backed by Amazon, said in the filing...</p>\n\n<a href=\"https://finance.yahoo.com/news/electric-vehicle-maker-rivian-seeks-231423387.html\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"AMZN":"亚马逊","RIVN":"Rivian Automotive, Inc."},"source_url":"https://finance.yahoo.com/news/electric-vehicle-maker-rivian-seeks-231423387.html","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1129056623","content_text":"Electric vehicle startup Rivian hopes to raise up $8.4 billion in its initial public offering, according to aregulatory filing posted Monday.\nThe company, which is backed by Amazon, said in the filing that it plans to offer 135 million shares at a price between $57 and $62. Underwriters also have an option to buy up to 20.25 million additional shares. If underwriters exercise that option, Rivian would raise as much as $9.6 billion.\nBased on the number of outstanding shares, that would put its market valuation at about $53 billion. If employee stock options and other restricted shares are considered, Rivian's valuation could be as high as $60 billion.\nRivian filed October 1 to become a publicly traded company in the United States. The S-1 document did not disclose the targeted share price at the time. An amended document filed Monday provided the new information, which included interest from repeat backer Amazon and newcomer Blackstone in Rivian.\nAmazon, funds and accounts advised by T. Rowe Price Associates, Coatue Management, Franklin Templeton, Capital Research Global Investors, D1 Capital Partners LP, Third Point LLC, funds affiliated with Blackstone Alternative Asset Management, Dragoneer Investment Group LLC and certain entities affiliated with Soros Fund Management LLC have indicated an interest in buying up to $5 billion of shares of Class A common stock.\nA recent filing by Amazon shows the e-commerce giant already holds a 20% stake in Rivian.\nRivian's filing was been one of the most anticipated of the year; now attention has turned to its public debut on the Nasdaq exchange. Rivian will trade under the ticker symbol RIVN.","news_type":1},"isVote":1,"tweetType":1,"viewCount":852,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":859856637,"gmtCreate":1634688744348,"gmtModify":1634688744420,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"Those who missed out on the crypto due to high price can now dip into this etf while it is still affordable.&nbsp;[得意]&nbsp;","listText":"Those who missed out on the crypto due to high price can now dip into this etf while it is still affordable.&nbsp;[得意]&nbsp;","text":"Those who missed out on the crypto due to high price can now dip into this etf while it is still affordable. [得意]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/859856637","repostId":"2176109068","repostType":2,"isVote":1,"tweetType":1,"viewCount":157,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":828898973,"gmtCreate":1633879264856,"gmtModify":1633879264856,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"<a href=\"https://laohu8.com/S/IIVI\">$II-VI Inc(IIVI)$</a>this stock is deeply integrated with Apple iPhone with its optical sensors and components. It is in a dip but clearly a great opportunity for those who has done their homework.","listText":"<a href=\"https://laohu8.com/S/IIVI\">$II-VI Inc(IIVI)$</a>this stock is deeply integrated with Apple iPhone with its optical sensors and components. It is in a dip but clearly a great opportunity for those who has done their homework.","text":"$II-VI Inc(IIVI)$this stock is deeply integrated with Apple iPhone with its optical sensors and components. It is in a dip but clearly a great opportunity for those who has done their homework.","images":[{"img":"https://static.tigerbbs.com/3a141d83efd5f162e2184a78b63fbe66","width":"1080","height":"3543"}],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/828898973","isVote":1,"tweetType":1,"viewCount":1432,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":1,"langContent":"CN","totalScore":0},{"id":844783186,"gmtCreate":1636460348672,"gmtModify":1636460348780,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"Great ariticle, would you like to share it?","listText":"Great ariticle, would you like to share it?","text":"Great ariticle, would you like to share it?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/844783186","repostId":"1174798558","repostType":2,"repost":{"id":"1174798558","kind":"news","pubTimestamp":1636447138,"share":"https://www.laohu8.com/m/news/1174798558?lang=&edition=full","pubTime":"2021-11-09 16:38","market":"us","language":"en","title":"Rivian: Even At A Lowered Valuation, Don't Buy This IPO","url":"https://stock-news.laohu8.com/highlight/detail?id=1174798558","media":"seeking alpha","summary":"Summary\n\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we t","content":"<p>Summary</p>\n<ul>\n <li>Despite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we think investors should avoid the temptation to buy Rivian shares.</li>\n <li>Rivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Tesla vehicles produced during the past 12 months.</li>\n <li>These manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.</li>\n <li>Looking for more investing ideas like this one? Get them exclusively at Value Investing 2.0 .</li>\n</ul>\n<p>Rivian (RIVN)is set to IPO next week with an expected valuation of ~$52 billion, the midpoint of its IPO price range. A $52 billion valuation is well below the $80 billion valuation the company originally sought, but it's still too high.</p>\n<p>Despite the popularity of the electric vehicle market and huge gains in Tesla’s (TSLA) stock, we think investors should avoid the temptation to buy Rivian shares.</p>\n<p>We're skeptical that Rivian’s IPO will deliver for investors even with the lower valuation. Investors shouldn’t buy a stock just because it’s in a hot sector.</p>\n<p>Rivian has yet to manufacture a meaningful number of vehicles and competes with well-capitalized electric vehicle upstarts as well as incumbents like General Motors (GM) and BMW, which both have decades of experience and multi-billion dollar plans to expand EV production.</p>\n<p>Rivian’s $52 billion valuation is about the same as Honda (HMC), which has world-class manufacturing capabilities and is investing heavily in a suite of electric vehicles. It makes no sense for Rivian to IPO with a valuation anywhere near Honda. Maybe, after several years of production and sales on par with Honda, Rivian would deserve a comparable valuation. But, to buy the stock at such a high price before the company has shown it can consistently produce more than a handful of cars seems ridiculous to us.</p>\n<p>Rivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Teslavehicles produced over the past 12 months and 66% more vehicles than Honda sold in the U.S. in 2020.</p>\n<p>These manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.</p>\n<p>Investments from Amazon(NASDAQ:AMZN)and Ford(NYSE:F)do nothing to justify the IPO valuation. Those investments were made at much lower prices and simply position these companies to participate in what appears to be a very lucrative IPO for private investors and owners.</p>\n<p>We believe the stock is worth $13 billion at best – a 75% downside to the midpoint IPO valuation of $52 billion.</p>\n<p>Below, we’ll outline the impracticality of Rivian meeting the expectations baked into the expected IPO valuation.</p>\n<p><b>$52 Billion Valuation Makes No Sense</b></p>\n<p>At its expected valuation of ~$52 billion, Rivian would be valued on par with Honda, a manufacturer that produced more than 4.5 million vehicles worldwide in fiscal 2021, and nearing Stellantis, BMW, and more. See Figure 1. At $1.2 trillion, Tesla’smarket cap is off the chart and is therefore excluded from Figure 1.</p>\n<p><b>Figure 1: Rivian’s Expected Valuation Compared to Competition</b></p>\n<p>Sources: New Constructs, LLC and company filings</p>\n<p><b>At Least Tesla Sold Vehicles Prior to IPO</b></p>\n<p>With no revenue from actual vehicle sales, investors need to understand that Rivian is in its infancy. Unsurprisingly,Core Earningswere -$398 million in 2019 and -$982 million in 2020 and the company burned -$2.5 billion in free cash flow (FCF) in 2020. In other words, the company looks more like a startup than one ready for an IPO. When Tesla went public in 2010 at a valuation of ~$1.7 billion, it was already delivering vehicles, and by the end of 2010, delivered over 1,500 units.</p>\n<p><b>Valuation Implies Rivian Will Take Huge Share of the Global EV Market</b></p>\n<p>With less than 200 deliveries of its R1T vehicle, Rivian doesn’t have significant sales to generate a meaningful average selling pricefor its vehicles. However, if we optimistically assume the starting price of $70,000 for its R1S as its ASP, Rivian’s expected valuation implies the company will sell 1.1 million vehicles in 2030, or 4% of theprojected global EV passenger vehicle marketin 2030.</p>\n<p>Meanwhile, Bloombergreportsthat Rivian is gearing up for production of upwards of 300,000 units, or just one-fourth the production implied by its expected IPO valuation. We think it's unlikely that Rivian will sell such a high volume of vehicles at a $70,000 ASP, and the implied vehicle sales based on lower ASPs look even more impractical.</p>\n<p>Per Figure 2, Rivian’s midpoint IPO valuation implies that, in 2030, it will sell the following number of vehicles based on different ASPs:</p>\n<ul>\n <li>1.1 million vehicles – ASP of $70k (starting price of Rivian’s R1S)</li>\n <li>1.5 million vehicles – ASP of $51k (equal to Tesla over TTM)</li>\n <li>2.0 million vehicles – ASP of $38k (average new car price in the U.S. in 2020)</li>\n <li>4.4 million vehicles – ASP of $17k (equal to General Motors over the TTM)</li>\n</ul>\n<p>If Rivian achieves those EV sales, the implied market share for the company would be the following (assuming global passenger EV sales reach 25.8 million in 2030, thebase case projection from the IEA):</p>\n<ul>\n <li>4% for 1.1 million vehicles</li>\n <li>6% for 1.5 million vehicles</li>\n <li>8% for 2.0 million vehicles</li>\n <li>17% for 4.4 million vehicles</li>\n</ul>\n<p><b>Figure 2: Implied Vehicle Sales in 2030 to Justify Expected Valuation</b></p>\n<p>Sources: New Constructs, LLC and company filings</p>\n<p>Buying stock in any company at a price that implies such huge market share gain is ill-advised, in our opinion.</p>\n<p><b>Doing the Math: $52 Billion Valuation Is Beyond Overvalued</b></p>\n<p>We use our reverse discounted cash flow model to provide more clarity, mathematical evidence that the expected IPO valuation is too high and offers unattractive risk/reward.</p>\n<p>In order to justify the midpoint of its IPO price range, Rivian must:</p>\n<ul>\n <li>Immediately achieve a 6% NOPAT margin (slightly below Tesla’s TTM margin) and</li>\n <li>grow revenue to $74 billion by 2030 (over 1.5x Tesla’s TTM revenue).</li>\n</ul>\n<p>In thisscenario, Rivian would generate $74 billion in revenue in fiscal 2030, which is 57% and 55% of General Motors’and Ford’sTTM revenue. This implied revenue is also used to calculate the implied vehicle sales in Figure 2 above, which are so high they warrant repeating. At an ASP of $70k, this scenario implies Rivian sells ~1.1 million vehicles in 2030, or 4% of the forecasted global EV passenger vehicle market in 2030. For reference, Honda sold 1.2 million vehicles in the U.S. in 2020.</p>\n<p><b>DCF Scenario 2: Growth at 5x Industry Expectations Equals 75% Downside</b></p>\n<p>We review an additional DCF scenario to highlight the downside risk even if Rivian’s revenue grows five times the expected industry growth rate.</p>\n<p>If we assume Rivian:</p>\n<ul>\n <li>immediately achieves a NOPAT margin of 6% and</li>\n <li>grows revenue to $25 billion by 2030, then</li>\n</ul>\n<p>RIVN is worth just $13 billion today – a 75% downside to the midpoint IPO valuation.See the math behind this reverse DCF scenario. In this scenario, Rivian would generate $24.7 billion in revenue in 2030, which is equal to Tesla’s 2019 revenue. At an ASP of $38k, the average new car price in the U.S. in 2020, this scenario implies Rivian sells 650,000vehicles in 2030, which is 110% of the number of Chevrolet Silverado’s sold in 2020 and 83% of the F-150s sold in 2020. For reference, this level of production is also 4x the maximum production capacity of the company’s Normal Factory.</p>\n<p>Based on our reverse DCF model, if the company cannot achieve at least five times the expected industry growth rate, the downside could be as much as 100%.</p>\n<p>Figure 3 compares Rivian’s historical NOPAT to the NOPAT implied by each of the above DCF scenarios. For additional context, we show Tesla’s, Stellantis’ and Ford’s TTM NOPAT. Notably, Honda’s TTM NOPAT, at $6.2 billion, is literally off the chart and is, therefore, excluded from Figure 3.</p>\n<p><b>Figure 3: Rivian’s IPO Valuation is Unreasonably High</b></p>\n<p>Sources: New Constructs, LLC and company filings</p>\n<p>Both of the above scenarios also assume Rivian grows revenue, NOPAT, and FCF without increasing working capital or fixed assets. This assumption is highly unlikely, especially given Rivian will need additional manufacturing plants to reach the production levels implied by its valuation, but allows us to create best-case scenarios that demonstrate the level of expectations embedded in the current valuation.</p>\n<p><b>Roadblocks to Justifying Rivian’s High Valuation</b></p>\n<p>Below, we present a few of the many challenges Rivian faces as it attempts to meet the expectations implied by its expected IPO valuation.</p>\n<p><b>Incumbents Are Coming for the EV Crown</b></p>\n<p>Incumbent automakers are highly profitable and generate billions in free cash flow by leveraging scale and manufacturing expertise. The advantages that incumbents have accumulated in the traditional auto market make their transition to the EV market easier than new entrants like Rivian and Tesla.</p>\n<p>We know from Tesla’s early days (filled with setbacks and delays) that it takes years to develop scale and manufacturing capabilities to routinely deliver a large number of quality vehicles on time. Rivian, despite investments from Ford that could help alleviate some early growing pains,already has delayed deliveryof its flagship vehicles. Any further delays could make some of the company’s pre-ordering customers, which total ~54,000 as of Oct. 31 for its passenger vehicles, look elsewhere. For comparison, Ford announced in October 2021 that it had over 160,000 reservations for its F-150 Lightning.</p>\n<p>In actual manufacturing, and not pre-orders, Ford, Volkswagen, General Motors, and on a smaller level Tesla, have already developed the necessary infrastructure to deliver vehicles at scale. Now, these incumbents are plowing headfirst with ample capital into the EV market, which diminishes Rivian’s ability to take market share. For example:</p>\n<ul>\n <li>Ford, which already introduced its Mustang Mach-E and F-150 Lightning, is increasing EV investments to$30 billionthrough 2025, andrecently announcedmulti-billion dollar battery and EV plants in Tennessee and Kentucky. As recently as May 2021, Ford projects that 40% of its sales, or 2.2 million units based on 2019 (pre-pandemic) sales, will be fully electric by 2030. This level of production would account for 9% of the International Energy Agency’s (IEA)base forecastfor EV sales in 2030.</li>\n <li>Volkswagen, Europe’s largest automaker, plans to invest almost $180 billion into EVs through 2025 and projects that50% of its global saleswill be fully electric by 2030, which would equate to 5.5 million vehicles based on 2019 sales. This number of vehicles would account for 21% of IEA’s base forecast for EV sales in 2030.</li>\n <li>General Motors plans to increase its investment into EVs to$35 billionthrough 2025 and plans to unveil an electric version of its Chevy Silverado in January 2022. General Motors is targeting EV sales of “more than 1 million” by 2025 which would give the company an 8% share of the EV market based on IEA’s base case for 2025.</li>\n <li>Tesla, the current world leader in EV sales, delivered more than 800,000 vehicles through the first three quarters of 2021 and isexpectedto deliver 1.3 million units in 2022. Despite delays, the company plans to introduce its Cybertruck and is in the process of building additional manufacturing plants.</li>\n <li>Stellantis, parent company of Dodge, Jeep, and Ram, recentlyannounceda partnership with LG to procure battery cells in North America and has noted its goals include having a zero-emission vehicle in every SUV segment by 2025.</li>\n</ul>\n<p>Ford, Volkswagen, and General Motors alone are planning to spend at least $245 billion through 2025 and produce nearly 9 million EVs by 2030. These numbers don’t include what other incumbents (Volvo, Honda, Jaguar Land Rover, Porsche, Mercedes, BMW, and more), and other new entrants (NIO, Lucid Motors, Lordstown Motors, and more) will contribute.</p>\n<p>Given that Rivian has not delivered a single vehicle to date, it is clearly chasing the competition at this point, and the competition has billions of dollars to spend to win the race.</p>\n<p><b>Incumbents Have Big Plans for SUVs and Trucks</b></p>\n<p>The incumbent manufacturers aren’t just throwing money at general EV goals or targets either. In fact, they’ve laid out clear plans to provide some of the most popular internal combustion vehicles in an EV format. Below are just some of the expected vehicles coming to the SUV/truck EV market:</p>\n<ul>\n <li>GM Hummer – 2021</li>\n <li>Bollinger B2 – 2021/2022</li>\n <li>Ford Lightning – 2022</li>\n <li>Chevy Silverado EV – 2023</li>\n <li>GMC Sierra EV – 2023</li>\n <li>Tesla Cybertruck – 2022/2023</li>\n <li>Canoo Pickup – 2023</li>\n <li>Ram 1500 Electric – 2024</li>\n</ul>\n<p><b>And Vans are Increasingly Competitive Too</b></p>\n<p>Competition will be fierce in the EV delivery van market as well, as manufacturers providing last-mile delivery trucks and vans look to maintain existing business with new EV platforms. Below are just some of the many delivery vans in production or scheduled for production.</p>\n<ul>\n <li>Fiat e-Ducato – already on sale in Europe</li>\n <li>Nissan e-NV200 – already on sale in Europe</li>\n <li>Ford E Transit – 2022</li>\n <li>BrightDrop EV600 – new GM brand for EV vans – 2022</li>\n <li>Workhorse C1000 – 2022</li>\n <li>Mercedes E Sprinter -already on sale in Europe – late 2023/early 2024 to US</li>\n</ul>\n<p><b>Partnerships Look Overhyped</b></p>\n<p>Many investors may get excited about Rivian’s partnerships with well-known companies like Amazonand Ford. However, when we dig into the details of these partnerships, they’re filled with hype and not much else.</p>\n<p><b>Amazon:</b>In 2019 Rivianannounceda partnership with Amazon Logistics Inc., (referred to in theS-1as “Logistics”) a subsidiary of Amazon which is responsible for last-mile delivery of Amazon’s retail operations. While it's reported that Amazon has ordered 100,000electric delivery vehicles (EDVs) from Rivian, under the terms of the agreement Amazon is under no obligation to actually purchase any vehicles. From the S-1:</p>\n<p>“While the EDV Agreement provides that we will be reimbursed for certain development costs, it does not include any minimum purchase requirements or otherwise restrict Logistics from developing vehicles or collaborating with, or purchasing similar vehicles from, third parties.”</p>\n<p>Additionally, Amazon Logistics has exclusive rights to purchase EDVs from Rivian for four years after the date of first vehicle delivery and a right of first refusal for an additional two years.</p>\n<p>In other words, Rivian cannot sell EDVs to any other company for four years after delivering its first vehicle to Amazon, whether or not Amazon decides to purchase any EDVs at all. The exclusivity clause of this agreement may significantly hamper Rivian’s ability to capture market share and allow more competitors to enter the EDV market uncontested.</p>\n<p><b>Ford:</b>Rivian also made headlines due to the investments from Ford, which now total nearly $800 million in Class B and D preferred stock. In 2019, Rivian entered into a purchase agreement with a Ford subsidiary, Troy Design and Manufacturing Co (referred to as TDM), for the supply of prototype and pre-production vehicles. Now that Rivian’s factory is up and running, it expects to discontinue purchases for this service from TDM.</p>\n<p>However, Rivian is still required to purchase certain key components for its R1 vehicle program exclusively from TDM for the life of the R1 vehicle program. Details on the rest of the partnership are unclear. Ford already cancelled plans to build a Lincoln EV based on Rivian’s platform in2020, stating that “it would be better to focus our development efforts on Lincoln’s own fully electric vehicle.” More recently, Ford executives left Rivian’s board of directors and Ford noted in astatementthat “Rivian is a strategic investment and we're still exploring ways for potential collaboration with them. We don't have anything to announce today.”</p>\n<p>While these partnerships were touted as legitimizing Rivian’s business, in reality, they look more like arms-length equity investments by Amazon and Ford. In its latest 10-Q, Amazon reported a 20% ownership interest in Rivian. In many respects, these partnerships hinder Rivian’s growth and cost model more than they help the company.</p>\n<p><b>Limited Addressable Market: Unable to Sell Cars in 28 States</b></p>\n<p>As of Sept. 30, 2021, Rivian is only allowed to sell its cars in 22 states and the District of Columbia, or less than half of the United States. In the other 28 states, which include the likes of New York, Texas, and New Jersey, Rivian is restricted from obtaining a dealer license to sell within the state (see page 148 of theS-1). While Rivian has shown that it can convince states to allow them to apply for a dealer’s license, it will be a long and expensive process to lobby each state individually.</p>\n<p><b>And Getting Service Could be Troublesome</b></p>\n<p>When it comes to fixing/repairing traditional vehicles, there are any number of options, from DIY, dealers, or auto shops. However, EVs require different repairs and getting service for a Rivian vehicle looks increasingly difficult.</p>\n<p>Eight states outright prohibit Rivian from owning or operating a service center providing warranty service (see page 148 of theS-1). While Rivian does have a plan to address these eight states, the solution is certainly not ideal for customers. Rivian has mobile service units which can be sent from neighboring states to reach customers in prohibited areas, and the company will offer towing services for broken cars to a state with a service location.</p>\n<p>However, as of today, Rivian has only six service centers in four states and only 11 mobile service vehicles (see page 3 of theS-1). For reference, Tesla has nearly 600 store and service locations and a mobile service fleet of nearly 1,100. GM, Ford, and Stellantis have a combined 9,600 dealerships throughout the United States.</p>\n<p>Rivian will need to spend significant capital, i.e. burn more cash, to build out a meaningful service network, or else it could see its service centers overfilled with a backlog of repairs, as we’ve alreadyseen with Tesla, which could damage demand.</p>\n<p><b>Stupid Money Risk Looks Low</b></p>\n<p>Given the multi-billion-dollar investments planned by the incumbents, we believe It's highly unlikely that Rivian will be acquired at its lofty expected valuation. Without delivering more than 200 vehicles, Rivian, at the midpoint of its IPO price range, already has a higher market cap than Honda and Nissan, and nearing Stellantis and BMW.</p>\n<p>Given that each of the competitors has its own manufacturing plants and existing vehicle platforms to leverage and build EVs, an acquisition of Rivian would be an extremely poor use of capital. Any acquirer would essentially be paying a massive premium to purchase the Rivian brand, which is still unproven in the auto market. It would be more cost effective for potential acquirers to compete with Rivian instead of acquiring them.</p>\n<p><b>Other Red Flags for Investors</b></p>\n<p>With a lofty valuation that implies likely unrealistic improvement in both revenue, profits, and market share, investors should be aware that Rivian’s S-1 also includes these other red flags.</p>\n<p><b>Insiders Have Majority Control</b>: Rivian will have multiple classes of common stock, with class A shares sold to the public and class B shares reserved for the founder and affiliates. Rivian discloses in its S-1 that Class A shares will have one vote per share and Class B shares will have 10 votes per share. After the completion of the IPO, the founder and early investors will hold 69% of the voting rights in the company. Amazon alone will hold 17% of the voting power.</p>\n<p>In other words, despite new investors paying a premium to buy the IPO and provide capital to the company, Rivian’s insiders and other owners will continue to control the company, and new shareholders will have little to no control over corporate governance.</p>\n<p><b>No Non-GAAP Metrics, Yet</b>: Many unprofitable companies present non-GAAP metrics to appear more profitable than they really are. However, Rivian discloses no non-GAAP metrics in its entire S-1. However, investors need to be aware that should such disclosure practice change, there is always a risk that non-GAAP metrics could be used to manipulate earnings going forward.</p>\n<p><b>We Don’t Know If We Can Trust the Financials:</b>Investors should take Rivian’s reported numbers with a grain of salt because the company identified a material weakness in its internal control over financial reporting. Specifically, the company identified a deficiency related to “controls to address segregation of duties across financially relevant functions and information technology general controls over tools and applications used in financial reporting.” As an emerging growth company, Rivian is not required to have an independent auditor provide an opinion on internal controls, so we’re glad the company chose to disclose this information.</p>\n<p>However, the company makes no assurances that the issues have been fixed, nor that it has identified all existing material weaknesses. From the S-1:</p>\n<p>“We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time… accordingly, we cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses.”</p>\n<p>Weaknesses in internal controls increase the risk that the company’s financials are fraudulent and/or misleading.</p>\n<p><b>Emerging Growth Status Limits Transparency</b>: By electing to operate as an “Emerging Growth Company,” Rivian is exempt from certain requirements that are beneficial to shareholders. For instance, and as noted above the SEC does not currently require Rivian to have an independent auditor provide an opinion on internal controls. Additionally, Rivian is not required to provide information on executive compensation structure and can delay adoption of certain accounting procedures, which limit the transparency of its financial statements.</p>\n<p><b>Critical Details Found in Financial Filings By OurRobo-Analyst Technology</b></p>\n<p>Below are specifics on the adjustments we make based on Robo-Analyst findings in Rivian’s S-1:</p>\n<p>Income Statement: We made $57 million in adjustments, with a net effect of removing $35 million in non-operating expenses. You can see all the adjustments made to Rivian’s income statementhere.</p>\n<p>Balance Sheet:Wemade $781 million in adjustments to calculate invested capital, with a net effect of decreasing invested capital by $725 million. The most notable adjustment was $3 million in operating leases. This adjustment represented &lt;1% of reported net assets. You can see all the adjustments made to Rivian’s balance sheethere.</p>\n<p>Valuation:Wemade $5.4 billion in adjustments to shareholder value, all of which decreased shareholder value. The largest adjustment to shareholder value was $5.2 billion in preferred capital. This adjustment represents 10% of the midpoint of Rivian’s IPO valuation. You can see all the adjustments made to Rivian’s valuationhere.</p>\n<p><i>This article originally published onNov. 3, 2021.</i></p>\n<p><i>Disclosure: David Trainer, Kyle Guske II, Alex Sword, and Matt Shuler receive no compensation to write about any specific stock, style, or theme.</i></p>","source":"seekingalpha","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Rivian: Even At A Lowered Valuation, Don't Buy This IPO</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nRivian: Even At A Lowered Valuation, Don't Buy This IPO\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-09 16:38 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4466233-even-at-a-lowered-valuation-dont-buy-rivians-ipo><strong>seeking alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we think investors should avoid the temptation to buy Rivian shares.\nRivian’s $52 billion valuation ...</p>\n\n<a href=\"https://seekingalpha.com/article/4466233-even-at-a-lowered-valuation-dont-buy-rivians-ipo\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"RIVN":"Rivian Automotive, Inc."},"source_url":"https://seekingalpha.com/article/4466233-even-at-a-lowered-valuation-dont-buy-rivians-ipo","is_english":true,"share_image_url":"https://static.laohu8.com/5a36db9d73b4222bc376d24ccc48c8a4","article_id":"1174798558","content_text":"Summary\n\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s stock, we think investors should avoid the temptation to buy Rivian shares.\nRivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Tesla vehicles produced during the past 12 months.\nThese manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.\nLooking for more investing ideas like this one? Get them exclusively at Value Investing 2.0 .\n\nRivian (RIVN)is set to IPO next week with an expected valuation of ~$52 billion, the midpoint of its IPO price range. A $52 billion valuation is well below the $80 billion valuation the company originally sought, but it's still too high.\nDespite the popularity of the electric vehicle market and huge gains in Tesla’s (TSLA) stock, we think investors should avoid the temptation to buy Rivian shares.\nWe're skeptical that Rivian’s IPO will deliver for investors even with the lower valuation. Investors shouldn’t buy a stock just because it’s in a hot sector.\nRivian has yet to manufacture a meaningful number of vehicles and competes with well-capitalized electric vehicle upstarts as well as incumbents like General Motors (GM) and BMW, which both have decades of experience and multi-billion dollar plans to expand EV production.\nRivian’s $52 billion valuation is about the same as Honda (HMC), which has world-class manufacturing capabilities and is investing heavily in a suite of electric vehicles. It makes no sense for Rivian to IPO with a valuation anywhere near Honda. Maybe, after several years of production and sales on par with Honda, Rivian would deserve a comparable valuation. But, to buy the stock at such a high price before the company has shown it can consistently produce more than a handful of cars seems ridiculous to us.\nRivian’s $52 billion valuation implies that Rivian will sell 2 million vehicles in 2030, or nearly 2.5 times the number of Teslavehicles produced over the past 12 months and 66% more vehicles than Honda sold in the U.S. in 2020.\nThese manufacturing milestones are highly improbable given Rivian’s lack of manufacturing infrastructure and experience as well as the intense competition it faces in the EV market.\nInvestments from Amazon(NASDAQ:AMZN)and Ford(NYSE:F)do nothing to justify the IPO valuation. Those investments were made at much lower prices and simply position these companies to participate in what appears to be a very lucrative IPO for private investors and owners.\nWe believe the stock is worth $13 billion at best – a 75% downside to the midpoint IPO valuation of $52 billion.\nBelow, we’ll outline the impracticality of Rivian meeting the expectations baked into the expected IPO valuation.\n$52 Billion Valuation Makes No Sense\nAt its expected valuation of ~$52 billion, Rivian would be valued on par with Honda, a manufacturer that produced more than 4.5 million vehicles worldwide in fiscal 2021, and nearing Stellantis, BMW, and more. See Figure 1. At $1.2 trillion, Tesla’smarket cap is off the chart and is therefore excluded from Figure 1.\nFigure 1: Rivian’s Expected Valuation Compared to Competition\nSources: New Constructs, LLC and company filings\nAt Least Tesla Sold Vehicles Prior to IPO\nWith no revenue from actual vehicle sales, investors need to understand that Rivian is in its infancy. Unsurprisingly,Core Earningswere -$398 million in 2019 and -$982 million in 2020 and the company burned -$2.5 billion in free cash flow (FCF) in 2020. In other words, the company looks more like a startup than one ready for an IPO. When Tesla went public in 2010 at a valuation of ~$1.7 billion, it was already delivering vehicles, and by the end of 2010, delivered over 1,500 units.\nValuation Implies Rivian Will Take Huge Share of the Global EV Market\nWith less than 200 deliveries of its R1T vehicle, Rivian doesn’t have significant sales to generate a meaningful average selling pricefor its vehicles. However, if we optimistically assume the starting price of $70,000 for its R1S as its ASP, Rivian’s expected valuation implies the company will sell 1.1 million vehicles in 2030, or 4% of theprojected global EV passenger vehicle marketin 2030.\nMeanwhile, Bloombergreportsthat Rivian is gearing up for production of upwards of 300,000 units, or just one-fourth the production implied by its expected IPO valuation. We think it's unlikely that Rivian will sell such a high volume of vehicles at a $70,000 ASP, and the implied vehicle sales based on lower ASPs look even more impractical.\nPer Figure 2, Rivian’s midpoint IPO valuation implies that, in 2030, it will sell the following number of vehicles based on different ASPs:\n\n1.1 million vehicles – ASP of $70k (starting price of Rivian’s R1S)\n1.5 million vehicles – ASP of $51k (equal to Tesla over TTM)\n2.0 million vehicles – ASP of $38k (average new car price in the U.S. in 2020)\n4.4 million vehicles – ASP of $17k (equal to General Motors over the TTM)\n\nIf Rivian achieves those EV sales, the implied market share for the company would be the following (assuming global passenger EV sales reach 25.8 million in 2030, thebase case projection from the IEA):\n\n4% for 1.1 million vehicles\n6% for 1.5 million vehicles\n8% for 2.0 million vehicles\n17% for 4.4 million vehicles\n\nFigure 2: Implied Vehicle Sales in 2030 to Justify Expected Valuation\nSources: New Constructs, LLC and company filings\nBuying stock in any company at a price that implies such huge market share gain is ill-advised, in our opinion.\nDoing the Math: $52 Billion Valuation Is Beyond Overvalued\nWe use our reverse discounted cash flow model to provide more clarity, mathematical evidence that the expected IPO valuation is too high and offers unattractive risk/reward.\nIn order to justify the midpoint of its IPO price range, Rivian must:\n\nImmediately achieve a 6% NOPAT margin (slightly below Tesla’s TTM margin) and\ngrow revenue to $74 billion by 2030 (over 1.5x Tesla’s TTM revenue).\n\nIn thisscenario, Rivian would generate $74 billion in revenue in fiscal 2030, which is 57% and 55% of General Motors’and Ford’sTTM revenue. This implied revenue is also used to calculate the implied vehicle sales in Figure 2 above, which are so high they warrant repeating. At an ASP of $70k, this scenario implies Rivian sells ~1.1 million vehicles in 2030, or 4% of the forecasted global EV passenger vehicle market in 2030. For reference, Honda sold 1.2 million vehicles in the U.S. in 2020.\nDCF Scenario 2: Growth at 5x Industry Expectations Equals 75% Downside\nWe review an additional DCF scenario to highlight the downside risk even if Rivian’s revenue grows five times the expected industry growth rate.\nIf we assume Rivian:\n\nimmediately achieves a NOPAT margin of 6% and\ngrows revenue to $25 billion by 2030, then\n\nRIVN is worth just $13 billion today – a 75% downside to the midpoint IPO valuation.See the math behind this reverse DCF scenario. In this scenario, Rivian would generate $24.7 billion in revenue in 2030, which is equal to Tesla’s 2019 revenue. At an ASP of $38k, the average new car price in the U.S. in 2020, this scenario implies Rivian sells 650,000vehicles in 2030, which is 110% of the number of Chevrolet Silverado’s sold in 2020 and 83% of the F-150s sold in 2020. For reference, this level of production is also 4x the maximum production capacity of the company’s Normal Factory.\nBased on our reverse DCF model, if the company cannot achieve at least five times the expected industry growth rate, the downside could be as much as 100%.\nFigure 3 compares Rivian’s historical NOPAT to the NOPAT implied by each of the above DCF scenarios. For additional context, we show Tesla’s, Stellantis’ and Ford’s TTM NOPAT. Notably, Honda’s TTM NOPAT, at $6.2 billion, is literally off the chart and is, therefore, excluded from Figure 3.\nFigure 3: Rivian’s IPO Valuation is Unreasonably High\nSources: New Constructs, LLC and company filings\nBoth of the above scenarios also assume Rivian grows revenue, NOPAT, and FCF without increasing working capital or fixed assets. This assumption is highly unlikely, especially given Rivian will need additional manufacturing plants to reach the production levels implied by its valuation, but allows us to create best-case scenarios that demonstrate the level of expectations embedded in the current valuation.\nRoadblocks to Justifying Rivian’s High Valuation\nBelow, we present a few of the many challenges Rivian faces as it attempts to meet the expectations implied by its expected IPO valuation.\nIncumbents Are Coming for the EV Crown\nIncumbent automakers are highly profitable and generate billions in free cash flow by leveraging scale and manufacturing expertise. The advantages that incumbents have accumulated in the traditional auto market make their transition to the EV market easier than new entrants like Rivian and Tesla.\nWe know from Tesla’s early days (filled with setbacks and delays) that it takes years to develop scale and manufacturing capabilities to routinely deliver a large number of quality vehicles on time. Rivian, despite investments from Ford that could help alleviate some early growing pains,already has delayed deliveryof its flagship vehicles. Any further delays could make some of the company’s pre-ordering customers, which total ~54,000 as of Oct. 31 for its passenger vehicles, look elsewhere. For comparison, Ford announced in October 2021 that it had over 160,000 reservations for its F-150 Lightning.\nIn actual manufacturing, and not pre-orders, Ford, Volkswagen, General Motors, and on a smaller level Tesla, have already developed the necessary infrastructure to deliver vehicles at scale. Now, these incumbents are plowing headfirst with ample capital into the EV market, which diminishes Rivian’s ability to take market share. For example:\n\nFord, which already introduced its Mustang Mach-E and F-150 Lightning, is increasing EV investments to$30 billionthrough 2025, andrecently announcedmulti-billion dollar battery and EV plants in Tennessee and Kentucky. As recently as May 2021, Ford projects that 40% of its sales, or 2.2 million units based on 2019 (pre-pandemic) sales, will be fully electric by 2030. This level of production would account for 9% of the International Energy Agency’s (IEA)base forecastfor EV sales in 2030.\nVolkswagen, Europe’s largest automaker, plans to invest almost $180 billion into EVs through 2025 and projects that50% of its global saleswill be fully electric by 2030, which would equate to 5.5 million vehicles based on 2019 sales. This number of vehicles would account for 21% of IEA’s base forecast for EV sales in 2030.\nGeneral Motors plans to increase its investment into EVs to$35 billionthrough 2025 and plans to unveil an electric version of its Chevy Silverado in January 2022. General Motors is targeting EV sales of “more than 1 million” by 2025 which would give the company an 8% share of the EV market based on IEA’s base case for 2025.\nTesla, the current world leader in EV sales, delivered more than 800,000 vehicles through the first three quarters of 2021 and isexpectedto deliver 1.3 million units in 2022. Despite delays, the company plans to introduce its Cybertruck and is in the process of building additional manufacturing plants.\nStellantis, parent company of Dodge, Jeep, and Ram, recentlyannounceda partnership with LG to procure battery cells in North America and has noted its goals include having a zero-emission vehicle in every SUV segment by 2025.\n\nFord, Volkswagen, and General Motors alone are planning to spend at least $245 billion through 2025 and produce nearly 9 million EVs by 2030. These numbers don’t include what other incumbents (Volvo, Honda, Jaguar Land Rover, Porsche, Mercedes, BMW, and more), and other new entrants (NIO, Lucid Motors, Lordstown Motors, and more) will contribute.\nGiven that Rivian has not delivered a single vehicle to date, it is clearly chasing the competition at this point, and the competition has billions of dollars to spend to win the race.\nIncumbents Have Big Plans for SUVs and Trucks\nThe incumbent manufacturers aren’t just throwing money at general EV goals or targets either. In fact, they’ve laid out clear plans to provide some of the most popular internal combustion vehicles in an EV format. Below are just some of the expected vehicles coming to the SUV/truck EV market:\n\nGM Hummer – 2021\nBollinger B2 – 2021/2022\nFord Lightning – 2022\nChevy Silverado EV – 2023\nGMC Sierra EV – 2023\nTesla Cybertruck – 2022/2023\nCanoo Pickup – 2023\nRam 1500 Electric – 2024\n\nAnd Vans are Increasingly Competitive Too\nCompetition will be fierce in the EV delivery van market as well, as manufacturers providing last-mile delivery trucks and vans look to maintain existing business with new EV platforms. Below are just some of the many delivery vans in production or scheduled for production.\n\nFiat e-Ducato – already on sale in Europe\nNissan e-NV200 – already on sale in Europe\nFord E Transit – 2022\nBrightDrop EV600 – new GM brand for EV vans – 2022\nWorkhorse C1000 – 2022\nMercedes E Sprinter -already on sale in Europe – late 2023/early 2024 to US\n\nPartnerships Look Overhyped\nMany investors may get excited about Rivian’s partnerships with well-known companies like Amazonand Ford. However, when we dig into the details of these partnerships, they’re filled with hype and not much else.\nAmazon:In 2019 Rivianannounceda partnership with Amazon Logistics Inc., (referred to in theS-1as “Logistics”) a subsidiary of Amazon which is responsible for last-mile delivery of Amazon’s retail operations. While it's reported that Amazon has ordered 100,000electric delivery vehicles (EDVs) from Rivian, under the terms of the agreement Amazon is under no obligation to actually purchase any vehicles. From the S-1:\n“While the EDV Agreement provides that we will be reimbursed for certain development costs, it does not include any minimum purchase requirements or otherwise restrict Logistics from developing vehicles or collaborating with, or purchasing similar vehicles from, third parties.”\nAdditionally, Amazon Logistics has exclusive rights to purchase EDVs from Rivian for four years after the date of first vehicle delivery and a right of first refusal for an additional two years.\nIn other words, Rivian cannot sell EDVs to any other company for four years after delivering its first vehicle to Amazon, whether or not Amazon decides to purchase any EDVs at all. The exclusivity clause of this agreement may significantly hamper Rivian’s ability to capture market share and allow more competitors to enter the EDV market uncontested.\nFord:Rivian also made headlines due to the investments from Ford, which now total nearly $800 million in Class B and D preferred stock. In 2019, Rivian entered into a purchase agreement with a Ford subsidiary, Troy Design and Manufacturing Co (referred to as TDM), for the supply of prototype and pre-production vehicles. Now that Rivian’s factory is up and running, it expects to discontinue purchases for this service from TDM.\nHowever, Rivian is still required to purchase certain key components for its R1 vehicle program exclusively from TDM for the life of the R1 vehicle program. Details on the rest of the partnership are unclear. Ford already cancelled plans to build a Lincoln EV based on Rivian’s platform in2020, stating that “it would be better to focus our development efforts on Lincoln’s own fully electric vehicle.” More recently, Ford executives left Rivian’s board of directors and Ford noted in astatementthat “Rivian is a strategic investment and we're still exploring ways for potential collaboration with them. We don't have anything to announce today.”\nWhile these partnerships were touted as legitimizing Rivian’s business, in reality, they look more like arms-length equity investments by Amazon and Ford. In its latest 10-Q, Amazon reported a 20% ownership interest in Rivian. In many respects, these partnerships hinder Rivian’s growth and cost model more than they help the company.\nLimited Addressable Market: Unable to Sell Cars in 28 States\nAs of Sept. 30, 2021, Rivian is only allowed to sell its cars in 22 states and the District of Columbia, or less than half of the United States. In the other 28 states, which include the likes of New York, Texas, and New Jersey, Rivian is restricted from obtaining a dealer license to sell within the state (see page 148 of theS-1). While Rivian has shown that it can convince states to allow them to apply for a dealer’s license, it will be a long and expensive process to lobby each state individually.\nAnd Getting Service Could be Troublesome\nWhen it comes to fixing/repairing traditional vehicles, there are any number of options, from DIY, dealers, or auto shops. However, EVs require different repairs and getting service for a Rivian vehicle looks increasingly difficult.\nEight states outright prohibit Rivian from owning or operating a service center providing warranty service (see page 148 of theS-1). While Rivian does have a plan to address these eight states, the solution is certainly not ideal for customers. Rivian has mobile service units which can be sent from neighboring states to reach customers in prohibited areas, and the company will offer towing services for broken cars to a state with a service location.\nHowever, as of today, Rivian has only six service centers in four states and only 11 mobile service vehicles (see page 3 of theS-1). For reference, Tesla has nearly 600 store and service locations and a mobile service fleet of nearly 1,100. GM, Ford, and Stellantis have a combined 9,600 dealerships throughout the United States.\nRivian will need to spend significant capital, i.e. burn more cash, to build out a meaningful service network, or else it could see its service centers overfilled with a backlog of repairs, as we’ve alreadyseen with Tesla, which could damage demand.\nStupid Money Risk Looks Low\nGiven the multi-billion-dollar investments planned by the incumbents, we believe It's highly unlikely that Rivian will be acquired at its lofty expected valuation. Without delivering more than 200 vehicles, Rivian, at the midpoint of its IPO price range, already has a higher market cap than Honda and Nissan, and nearing Stellantis and BMW.\nGiven that each of the competitors has its own manufacturing plants and existing vehicle platforms to leverage and build EVs, an acquisition of Rivian would be an extremely poor use of capital. Any acquirer would essentially be paying a massive premium to purchase the Rivian brand, which is still unproven in the auto market. It would be more cost effective for potential acquirers to compete with Rivian instead of acquiring them.\nOther Red Flags for Investors\nWith a lofty valuation that implies likely unrealistic improvement in both revenue, profits, and market share, investors should be aware that Rivian’s S-1 also includes these other red flags.\nInsiders Have Majority Control: Rivian will have multiple classes of common stock, with class A shares sold to the public and class B shares reserved for the founder and affiliates. Rivian discloses in its S-1 that Class A shares will have one vote per share and Class B shares will have 10 votes per share. After the completion of the IPO, the founder and early investors will hold 69% of the voting rights in the company. Amazon alone will hold 17% of the voting power.\nIn other words, despite new investors paying a premium to buy the IPO and provide capital to the company, Rivian’s insiders and other owners will continue to control the company, and new shareholders will have little to no control over corporate governance.\nNo Non-GAAP Metrics, Yet: Many unprofitable companies present non-GAAP metrics to appear more profitable than they really are. However, Rivian discloses no non-GAAP metrics in its entire S-1. However, investors need to be aware that should such disclosure practice change, there is always a risk that non-GAAP metrics could be used to manipulate earnings going forward.\nWe Don’t Know If We Can Trust the Financials:Investors should take Rivian’s reported numbers with a grain of salt because the company identified a material weakness in its internal control over financial reporting. Specifically, the company identified a deficiency related to “controls to address segregation of duties across financially relevant functions and information technology general controls over tools and applications used in financial reporting.” As an emerging growth company, Rivian is not required to have an independent auditor provide an opinion on internal controls, so we’re glad the company chose to disclose this information.\nHowever, the company makes no assurances that the issues have been fixed, nor that it has identified all existing material weaknesses. From the S-1:\n“We will not be able to fully remediate these material weaknesses until these steps have been completed and have been operating effectively for a sufficient period of time… accordingly, we cannot assure you that we have identified all, or that we will not in the future have additional, material weaknesses.”\nWeaknesses in internal controls increase the risk that the company’s financials are fraudulent and/or misleading.\nEmerging Growth Status Limits Transparency: By electing to operate as an “Emerging Growth Company,” Rivian is exempt from certain requirements that are beneficial to shareholders. For instance, and as noted above the SEC does not currently require Rivian to have an independent auditor provide an opinion on internal controls. Additionally, Rivian is not required to provide information on executive compensation structure and can delay adoption of certain accounting procedures, which limit the transparency of its financial statements.\nCritical Details Found in Financial Filings By OurRobo-Analyst Technology\nBelow are specifics on the adjustments we make based on Robo-Analyst findings in Rivian’s S-1:\nIncome Statement: We made $57 million in adjustments, with a net effect of removing $35 million in non-operating expenses. You can see all the adjustments made to Rivian’s income statementhere.\nBalance Sheet:Wemade $781 million in adjustments to calculate invested capital, with a net effect of decreasing invested capital by $725 million. The most notable adjustment was $3 million in operating leases. This adjustment represented <1% of reported net assets. You can see all the adjustments made to Rivian’s balance sheethere.\nValuation:Wemade $5.4 billion in adjustments to shareholder value, all of which decreased shareholder value. The largest adjustment to shareholder value was $5.2 billion in preferred capital. This adjustment represents 10% of the midpoint of Rivian’s IPO valuation. You can see all the adjustments made to Rivian’s valuationhere.\nThis article originally published onNov. 3, 2021.\nDisclosure: David Trainer, Kyle Guske II, Alex Sword, and Matt Shuler receive no compensation to write about any specific stock, style, or theme.","news_type":1},"isVote":1,"tweetType":1,"viewCount":617,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":842438056,"gmtCreate":1636213899149,"gmtModify":1636213899236,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"Really impressive article and research.&nbsp;[强]&nbsp;","listText":"Really impressive article and research.&nbsp;[强]&nbsp;","text":"Really impressive article and research. [强]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/842438056","repostId":"1171459652","repostType":2,"repost":{"id":"1171459652","kind":"news","pubTimestamp":1636016608,"share":"https://www.laohu8.com/m/news/1171459652?lang=&edition=full","pubTime":"2021-11-04 17:03","market":"us","language":"en","title":"Disney Is A Conviction Buy","url":"https://stock-news.laohu8.com/highlight/detail?id=1171459652","media":"Seeking Alpha","summary":"Summary\n\nDisney today offers the opportunity to invest in a transition story at the relatively early","content":"<p><b>Summary</b></p>\n<ul>\n <li>Disney today offers the opportunity to invest in a transition story at the relatively early stages. Investors today will likely be handsomely rewarded over time.</li>\n <li>Looking at Disney’s valuation with a SOTP method shows significant undervaluation with attractive risk-reward.</li>\n <li>Disney is a conviction buy for me despite the execution risk.</li>\n</ul>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/4f931c901deb3918d74590c419b386ca\" tg-width=\"1536\" tg-height=\"1024\" width=\"100%\" height=\"auto\"><span>EnchantedFairy/iStock Editorial via Getty Images</span></p>\n<p><b>Investment Thesis</b></p>\n<p>Disney’s (DIS) valuation is often misinterpreted, in my opinion. The company is at the early stages of a favorable transformation and will likely deliver results mirroring those of some great companies. Breaking the company into parts and valuing the segments individually is more appropriate than looking at the company as a whole as neither its history nor any other public company is an appropriate comparison. In doing so, I calculate 32% undervaluation with conservative estimates. I also calculate a very unlikely grey sky scenario of a 44% loss and a not-that-unlikely blue sky scenario of 72% gains. I love the risk-reward and am a buyer of the company with conviction despite the relatively high execution risk.</p>\n<p><b>Most Misjudge Disney’s Valuation</b></p>\n<p>A lot of investors overlook the underlying parts of Disney when looking at the company’s valuation. I’ve noticed this reading many SA articles that have neutral and bearish views on the stock. Most authors analyze comparing current multiples to Disney’s history. This method is significantly misleading as Disney is a different company today than it was a few years ago. It makes sense to use historical multiples in finding discounts arising from diversion from the mean with stable businesses. Comparing a changing business to its history is like comparing the multiples of companies with different operations.</p>\n<p>Another thing I thought was wrong was the sales multiple used. Sales multiple only makes sense when comparing very similar companies as the profitability structure and accounting of revenues can change significantly. Even when comparing similar companies, intuition in adjusting premia is common to account for said differences. Comparing Disney’s current P/S to what it was years ago is a futile endeavor in assessing the company’s valuation.</p>\n<p>Furthermore, a certain amount of valuation premium compared to its history is warranted for Disney. Parks and studios make up a significant chunk of Disney earnings and thus valuation and they’ve been negatively affected by the pandemic. Studios had to delay launches due to production cuts and parks had to close down and consumers were afraid to travel to them. Now, with the pent-up demand and with the string of new launches, we should see this trend mean-revert. Revenues and earnings of the coming quarters will be higher than what they were in the pandemic times. Valuation adjusts to this fact which inflates trailing multiples.</p>\n<p><b>Changes in the Business Changes Multiples Permanently</b></p>\n<p>When a company pivots into a new model its multiple will adjust. A favorable pivot will bring a larger multiple and vice versa. I want to provide concrete examples to support my thesis with charts of sales multiples with accompanying price moves. First is the greatest of pivots, Netflix’s (NFLX) ramping of streaming from mailing DVDs. The pioneering trailblazer of streaming’s success is evident in its growing multiples. Next up, Adobe (ADBE) and Autodesk’s (ADSK) cloud transition. Autodesk followed Adobe’s lead in changing its business model from a license-based one to a favorable SaaS model, multiple expansions followed. And I have to mention perhaps the greatest of corporate pivots, the big daddy Microsoft’s switch to cloud and launch of Azure. The big and slow giant achieved an amazing feat and adapted to the age of cloud computing and earned a massive multiple expansion after years of contraction. And last but definitely not least let’s not forget about the store of everything Amazon’s (AMZN) launch of AWS. The company earned a new multiple with its new fast-growing, highly profitable business. The multiples went on to expand for years and years accompanied by a rocketing stock price.</p>\n<p><img src=\"https://static.tigerbbs.com/775122c6392f1e03e128f86a291c3d92\" tg-width=\"640\" tg-height=\"252\" width=\"100%\" height=\"auto\"><img src=\"https://static.tigerbbs.com/239be2347bdb8e8dd8bdcbd50565c612\" tg-width=\"640\" tg-height=\"246\" width=\"100%\" height=\"auto\"><img src=\"https://static.tigerbbs.com/5cb3922bc8f82958e9e2fb52243c8158\" tg-width=\"640\" tg-height=\"248\" width=\"100%\" height=\"auto\"><img src=\"https://static.tigerbbs.com/a282e0a6266ddc51f4586a4df7fc586a\" tg-width=\"640\" tg-height=\"249\" width=\"100%\" height=\"auto\"></p>\n<p class=\"t-img-caption\"><img src=\"https://static.tigerbbs.com/5a30863ae43df3e40bfdf9568e36f969\" tg-width=\"640\" tg-height=\"254\" width=\"100%\" height=\"auto\"><span>Source: Capital IQ</span></p>\n<p>One judging these companies' values by comparing them to their history at the early stages of these transformative new launches would’ve missed the opportunity without fault. New ventures tend to be in a sector that is more favorable and/or faster-growing than the company's current operations as these are the areas where managements tend to invest in. And these new ventures tend to have higher multiples increasing the overall multiple of the consolidated company. Looking at history and saying that the current multiple is expensive is essentially assuming the same multiple for the new venture as the company and is wrong.</p>\n<p>Disney is transforming itself from an old-world business into a new world one and provides the opportunity to invest today at the relatively early stages of the charts listed above. Legacy operations vary from deeply unfavorable, chord-cutting ailed linear networks to boring studios, consumer products, and parks while the new DTC venture is a highly scalable, fast-growing, cloud-based SaaS operation in a secular growth area. The multiple difference is stark. It’s normal that Disney’s multiple today is significantly higher than before, especially considering the coming surge in demand from the consumer reopening. I think that the multiple will continue to grow as DTC makes up a growing part of the business mix.</p>\n<p><b>A Sum of the Parts Approach Shows that Disney Offers Excellent Risk-Reward</b></p>\n<p>I will conduct a sum of the parts (SOTP) valuation to make sense of the situation and to avoid the fallacy of missing different parts of the business while looking at the big picture. I will divide the company into five main sub-segments: 1) linear networks: the legacy broadcasting operations, 2) DTC: the new streaming services, 3) content sales/licensing: the studio segment and related distribution, 4) parks and experiences: theme parks and related revenue such as F&amp;B, hospitality, and park merchandise, and 5) consumer products: Disney’s retail stores, merchandise, and licensed products. I believe that calculating an individual value for each segment reveals the fundamental value of the company much better than looking at historical multiples or comparing company level multiples to peers.</p>\n<p>I will analyze company valuation by breaking the financials apart and then multiplying them by appropriate multiples compared to appropriate peers. I will work on three scenarios using assumptions of various aggression: grey sky, base case, and blue sky. Take my work with a big grain of salt as it's more art than science. I will use my judgment in finding the correct multiple and peer group and my results will likely be biased by my view of the world. However, I’m very open to updating my work based on constructive criticism so please let me know if you have suggestions. I’m an owner of Disney stock and the true value of the company is important to me.</p>\n<p>Additionally, I’m happy to share my work with anyone who wants it. Let me know if you do. Even breaking the financials apart is hours of work due to the uniquely terrible and inconsistent way that Disney reports segment results. Below are the inputs I’ll be using.</p>\n<p><img src=\"https://static.tigerbbs.com/d23c348d7f6e07429699111643d63bd1\" tg-width=\"640\" tg-height=\"465\" width=\"100%\" height=\"auto\"></p>\n<p><b>Linear Networks Valuation</b></p>\n<p>I’m basing my linear networks work on EV/EBITDA and EV/Revenue multiples of the last twelve month values. I’m using broadcasting companies as my peer group. My grey and blue sky scenarios are the lowest and highest multiples in the peer group and my base case is the peer median. I’ve taken the initiative to award a higher-than-peer multiple in the base cases of many segments as I think that Disney’s incredible IP and power of its network and brand deserve it. But I didn’t on the networks segment as a) I don’t see a huge advantage over peers, and b) I wanted to be extra cautious on this segment as its future is in doubt. I’m calculating a $49 bn bear, $70 bn base, and $88 bn bull case valuations.</p>\n<p><img src=\"https://static.tigerbbs.com/ad837bf79cb399b59ce1b52a92b14030\" tg-width=\"640\" tg-height=\"162\" width=\"100%\" height=\"auto\"></p>\n<p><b>Direct To Consumer Valuation</b></p>\n<p>The DTC segment is the main one that will bring multiple expansion. It’s the AWS of Amazon and Azure of Microsoft. I’m using a peer group of streamers as well as B2C software subscription service vendors as I think that their dynamics are similar. I’m basing my work solely on the sales multiple as revenue is what’s most important for this group. My base case is a 3-turn premium to Netflix to adjust for Disney’s fast growth from nascent operations. Disney’s DTC revenues grew almost 60% YoY in its last quarter while Netflix grew less than 20%. I would say that this 3x premium to Netflix is even conservative and doesn’t sufficiently reflect the difference in growth. Moreover, Disney deserves a premium due to its greater IP. Disney’s content is best-in-class and can be watched and rewatched many times over. This moat will strengthen further as more of 21stCentury Fox content becomes available on the platform. In my opinion, the quality IP will translate into lower churn and higher customer lifetime value over time, and thus Disney’s current revenue is worth more than Netflix’s.</p>\n<p>My bull and bear cases are the top and bottom multiples in the group. The calculation yields a bear case $60bn, base case $211 bn, and bull case $267 bn value.</p>\n<p><img src=\"https://static.tigerbbs.com/6ea3cc58658886e6176743280daba654\" tg-width=\"640\" tg-height=\"161\" width=\"100%\" height=\"auto\"></p>\n<p>What is worth highlighting here is that even if Disney’s DTC offering fails as Sirius’ (SIRI) services did, they’re still worth &gt;$60bn. And I want to state the obvious and say that this is an extremely unlikely scenario. First, the viability of Disney’s streaming offers has been proven by the recent demand, and it's almost certain that there’s a large room for it in the streaming market. And second, movie streaming is more profitable than music, especially for content owners. Disney doesn’t have to pay royalties to content producers as it produces the content itself. Its DTC operations are much more scalable than those of Spotify (SPOT) and Sirius and deserve much higher multiples.</p>\n<p><b>Consumer Products Valuation</b></p>\n<p>Consumer products division is often forgotten and bundled with parks. However, it’s a completely different business and should be looked at in isolation. Disney both operates its stores and licenses its merchandise globally. Merchandise sold in parks isn’t in this segment and is included in Parks &amp; Experiences segment’s financials. My peer group here is of retailers or retail suppliers with strong brands and my chosen multiples are revenue and EBITDA.</p>\n<p>My chosen multiple for my base case is that of RH (RH) as I think that the companies prime valuation suits that of Disney. RH has premium products and strong pricing power. Disney’s retail merchandise may not be premium the same way but it definitely has pricing power. Consumers will pay more for products with Disney characters’ logos on them. Disney also has growth potential in this segment leveraging the new content produced from studios. My low multiples are those of Build-A-Bear’s (BBW) peer group low and my peak multiples are once again RH for revenue but Callaway (ELY) for EBITDA. The results are $8 bn bear, and $33 bn, and $38 bn base and bull case valuations.</p>\n<p>The chosen multiple yields</p>\n<p><img src=\"https://static.tigerbbs.com/b384a22812e613cae82c5aa2aacbd86a\" tg-width=\"640\" tg-height=\"188\" width=\"100%\" height=\"auto\"></p>\n<p><b>Content Sales/Licensing Valuation</b></p>\n<p>The content sales/licensing segment is the studios and related distribution. I’ve included Warner Music (WMG) due to the similarity in operations (producing content then distributing it) albeit in a different vertical. I will say that the peer group here isn’t perfect. Most large studios are consolidated into larger entities. I had to use the consolidated companies as peers which I don’t think is correct as the multiples for studios get diluted in the whole company. I’ve tried to adjust for this in my chosen multiples and give Disney a premium to peer average in my base case multiples. I went with peer low and high multiples for other cases.</p>\n<p>I chose to alter the valuation denominator for the entire group and use multiples over pre-pandemic values. I did this to cancel out the one-off effect of the pandemic and measure companies on their normal performance. Considering the backlog of releases that were delayed by the pandemic, I believe that a higher multiple is warranted. I choose Disney’s fiscal 2019 as the period which ends in September 2019 and adjusted peer multiples accordingly.</p>\n<p>The valuation for the segment came out to be $18 bn, $41 bn, $65 bn for the three scenarios.</p>\n<p><img src=\"https://static.tigerbbs.com/a87ff24e94fa379bb559742892fc1863\" tg-width=\"640\" tg-height=\"137\" width=\"100%\" height=\"auto\"></p>\n<p><b>Parks and Experiences Valuation</b></p>\n<p>I’ve followed a similar method here to what I did in studios and used multiples over pre-pandemic values. Parks were also harmed by the pandemic, perhaps even more than movies. And the reopening will see even greater demand. People locked inside distancing for more than a year and a half will want to indulge themselves in travel. Many families will choose Disney parks. Even those that thought of it as expensive will likely indulge themselves. The reopening warrants a premium multiple.</p>\n<p>Disney deserves a premium on top of that. The company has amazing pricing power. They’ve raised prices by&nbsp;ridiculous amounts&nbsp;far outstripping inflation. Consumers still flock to the parks. The best-in-class IP combined give Disney’s parks unmatched appeal. The new content from studios has the power to fuel new growth. The parks of Disney deserve a significant premium to what other park operators trade at.</p>\n<p>I’ve used SeaWorld’s (SEAS) numbers as my bear case and built varying amounts of premia on top of that for the other scenarios. I believe that even higher multiples are more than fair given Disney’s advantages but I’ll stick with these as I want to remain on the conservative side of things. I get $116 bn, $132 bn, and $150 bn for the three scenarios.</p>\n<p><img src=\"https://static.tigerbbs.com/f1d427c62e5982a7a68ca517c1e37ed9\" tg-width=\"640\" tg-height=\"144\" width=\"100%\" height=\"auto\"></p>\n<p><b>Putting it All Together Shows Significant Undervaluation</b></p>\n<p>Combining the values of 5 segments under the three scenarios yields $251 bn, $487 bn, and $609 bn in total EV. I want to account for the unallocated and shared OPEX which wasn’t reported in any of the segments. I multiply these costs by Disney’s current overall multiple and reduce them from the total EV. After reducing net debt as well I get implied market caps of $174 bn, $410 bn, and $531 bn for the three scenarios providing a 32% upside on the base case and a 44% loss and 72% gain on tail outcomes.</p>\n<p><img src=\"https://static.tigerbbs.com/153bca8cab0e1c08fe4f69485c1d08ef\" tg-width=\"408\" tg-height=\"360\" width=\"100%\" height=\"auto\"></p>\n<p>I want to make a particular note here of the conservativeness of the analysis. The two most important segments’, DTCs and P&amp;Es, bear cases are extremely bearish. I would think it improbable that Disney’s respective segments would trade at those multiples given today’s world. I think that the base case is highly achievable and that the blue sky scenario isn’t nearly as farfetched as the grey sky one and that it’s achievable as well.</p>\n<p>Given the risk-reward to the upside, particularly considering the probabilities of the three scenarios, I’m a buyer of Disney with high conviction.</p>\n<p><b>The Investment Comes with Large Execution Risk</b></p>\n<p>Disney may have huge potential but it has large execution risk as well. The largest portion of the valuation is tied to the nascent DTC operation. There is a lot that Disney needs to achieve to deliver on that front. I’m highly confident that it will. My belief is backed by the obvious demand for the content. I think that the company will be able to transfer at least some of its pricing power to the streaming business to make it a true software giant. However, if you don’t think that Disney will be able to deliver or that the future of the streaming industry is not as bright as valued for whatever reason, you may want to hold back.</p>","collect":0,"html":"<!DOCTYPE html>\n<html>\n<head>\n<meta http-equiv=\"Content-Type\" content=\"text/html; charset=utf-8\" />\n<meta name=\"viewport\" content=\"width=device-width,initial-scale=1.0,minimum-scale=1.0,maximum-scale=1.0,user-scalable=no\"/>\n<meta name=\"format-detection\" content=\"telephone=no,email=no,address=no\" />\n<title>Disney Is A Conviction Buy</title>\n<style type=\"text/css\">\na,abbr,acronym,address,applet,article,aside,audio,b,big,blockquote,body,canvas,caption,center,cite,code,dd,del,details,dfn,div,dl,dt,\nem,embed,fieldset,figcaption,figure,footer,form,h1,h2,h3,h4,h5,h6,header,hgroup,html,i,iframe,img,ins,kbd,label,legend,li,mark,menu,nav,\nobject,ol,output,p,pre,q,ruby,s,samp,section,small,span,strike,strong,sub,summary,sup,table,tbody,td,tfoot,th,thead,time,tr,tt,u,ul,var,video{ font:inherit;margin:0;padding:0;vertical-align:baseline;border:0 }\nbody{ font-size:16px; line-height:1.5; color:#999; background:transparent; }\n.wrapper{ overflow:hidden;word-break:break-all;padding:10px; }\nh1,h2{ font-weight:normal; line-height:1.35; margin-bottom:.6em; }\nh3,h4,h5,h6{ line-height:1.35; margin-bottom:1em; }\nh1{ font-size:24px; }\nh2{ font-size:20px; }\nh3{ font-size:18px; }\nh4{ font-size:16px; }\nh5{ font-size:14px; }\nh6{ font-size:12px; }\np,ul,ol,blockquote,dl,table{ margin:1.2em 0; }\nul,ol{ margin-left:2em; }\nul{ list-style:disc; }\nol{ list-style:decimal; }\nli,li p{ margin:10px 0;}\nimg{ max-width:100%;display:block;margin:0 auto 1em; }\nblockquote{ color:#B5B2B1; border-left:3px solid #aaa; padding:1em; }\nstrong,b{font-weight:bold;}\nem,i{font-style:italic;}\ntable{ width:100%;border-collapse:collapse;border-spacing:1px;margin:1em 0;font-size:.9em; }\nth,td{ padding:5px;text-align:left;border:1px solid #aaa; }\nth{ font-weight:bold;background:#5d5d5d; }\n.symbol-link{font-weight:bold;}\n/* header{ border-bottom:1px solid #494756; } */\n.title{ margin:0 0 8px;line-height:1.3;color:#ddd; }\n.meta {color:#5e5c6d;font-size:13px;margin:0 0 .5em; }\na{text-decoration:none; color:#2a4b87;}\n.meta .head { display: inline-block; overflow: hidden}\n.head .h-thumb { width: 30px; height: 30px; margin: 0; padding: 0; border-radius: 50%; float: left;}\n.head .h-content { margin: 0; padding: 0 0 0 9px; float: left;}\n.head .h-name {font-size: 13px; color: #eee; margin: 0;}\n.head .h-time {font-size: 11px; color: #7E829C; margin: 0;line-height: 11px;}\n.small {font-size: 12.5px; display: inline-block; transform: scale(0.9); -webkit-transform: scale(0.9); transform-origin: left; -webkit-transform-origin: left;}\n.smaller {font-size: 12.5px; display: inline-block; transform: scale(0.8); -webkit-transform: scale(0.8); transform-origin: left; -webkit-transform-origin: left;}\n.bt-text {font-size: 12px;margin: 1.5em 0 0 0}\n.bt-text p {margin: 0}\n</style>\n</head>\n<body>\n<div class=\"wrapper\">\n<header>\n<h2 class=\"title\">\nDisney Is A Conviction Buy\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-11-04 17:03 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4465298-disney-is-conviction-buy><strong>Seeking Alpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Summary\n\nDisney today offers the opportunity to invest in a transition story at the relatively early stages. Investors today will likely be handsomely rewarded over time.\nLooking at Disney’s valuation...</p>\n\n<a href=\"https://seekingalpha.com/article/4465298-disney-is-conviction-buy\">Web Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","type":0,"thumbnail":"","relate_stocks":{"DIS":"迪士尼"},"source_url":"https://seekingalpha.com/article/4465298-disney-is-conviction-buy","is_english":true,"share_image_url":"https://static.laohu8.com/e9f99090a1c2ed51c021029395664489","article_id":"1171459652","content_text":"Summary\n\nDisney today offers the opportunity to invest in a transition story at the relatively early stages. Investors today will likely be handsomely rewarded over time.\nLooking at Disney’s valuation with a SOTP method shows significant undervaluation with attractive risk-reward.\nDisney is a conviction buy for me despite the execution risk.\n\nEnchantedFairy/iStock Editorial via Getty Images\nInvestment Thesis\nDisney’s (DIS) valuation is often misinterpreted, in my opinion. The company is at the early stages of a favorable transformation and will likely deliver results mirroring those of some great companies. Breaking the company into parts and valuing the segments individually is more appropriate than looking at the company as a whole as neither its history nor any other public company is an appropriate comparison. In doing so, I calculate 32% undervaluation with conservative estimates. I also calculate a very unlikely grey sky scenario of a 44% loss and a not-that-unlikely blue sky scenario of 72% gains. I love the risk-reward and am a buyer of the company with conviction despite the relatively high execution risk.\nMost Misjudge Disney’s Valuation\nA lot of investors overlook the underlying parts of Disney when looking at the company’s valuation. I’ve noticed this reading many SA articles that have neutral and bearish views on the stock. Most authors analyze comparing current multiples to Disney’s history. This method is significantly misleading as Disney is a different company today than it was a few years ago. It makes sense to use historical multiples in finding discounts arising from diversion from the mean with stable businesses. Comparing a changing business to its history is like comparing the multiples of companies with different operations.\nAnother thing I thought was wrong was the sales multiple used. Sales multiple only makes sense when comparing very similar companies as the profitability structure and accounting of revenues can change significantly. Even when comparing similar companies, intuition in adjusting premia is common to account for said differences. Comparing Disney’s current P/S to what it was years ago is a futile endeavor in assessing the company’s valuation.\nFurthermore, a certain amount of valuation premium compared to its history is warranted for Disney. Parks and studios make up a significant chunk of Disney earnings and thus valuation and they’ve been negatively affected by the pandemic. Studios had to delay launches due to production cuts and parks had to close down and consumers were afraid to travel to them. Now, with the pent-up demand and with the string of new launches, we should see this trend mean-revert. Revenues and earnings of the coming quarters will be higher than what they were in the pandemic times. Valuation adjusts to this fact which inflates trailing multiples.\nChanges in the Business Changes Multiples Permanently\nWhen a company pivots into a new model its multiple will adjust. A favorable pivot will bring a larger multiple and vice versa. I want to provide concrete examples to support my thesis with charts of sales multiples with accompanying price moves. First is the greatest of pivots, Netflix’s (NFLX) ramping of streaming from mailing DVDs. The pioneering trailblazer of streaming’s success is evident in its growing multiples. Next up, Adobe (ADBE) and Autodesk’s (ADSK) cloud transition. Autodesk followed Adobe’s lead in changing its business model from a license-based one to a favorable SaaS model, multiple expansions followed. And I have to mention perhaps the greatest of corporate pivots, the big daddy Microsoft’s switch to cloud and launch of Azure. The big and slow giant achieved an amazing feat and adapted to the age of cloud computing and earned a massive multiple expansion after years of contraction. And last but definitely not least let’s not forget about the store of everything Amazon’s (AMZN) launch of AWS. The company earned a new multiple with its new fast-growing, highly profitable business. The multiples went on to expand for years and years accompanied by a rocketing stock price.\n\nSource: Capital IQ\nOne judging these companies' values by comparing them to their history at the early stages of these transformative new launches would’ve missed the opportunity without fault. New ventures tend to be in a sector that is more favorable and/or faster-growing than the company's current operations as these are the areas where managements tend to invest in. And these new ventures tend to have higher multiples increasing the overall multiple of the consolidated company. Looking at history and saying that the current multiple is expensive is essentially assuming the same multiple for the new venture as the company and is wrong.\nDisney is transforming itself from an old-world business into a new world one and provides the opportunity to invest today at the relatively early stages of the charts listed above. Legacy operations vary from deeply unfavorable, chord-cutting ailed linear networks to boring studios, consumer products, and parks while the new DTC venture is a highly scalable, fast-growing, cloud-based SaaS operation in a secular growth area. The multiple difference is stark. It’s normal that Disney’s multiple today is significantly higher than before, especially considering the coming surge in demand from the consumer reopening. I think that the multiple will continue to grow as DTC makes up a growing part of the business mix.\nA Sum of the Parts Approach Shows that Disney Offers Excellent Risk-Reward\nI will conduct a sum of the parts (SOTP) valuation to make sense of the situation and to avoid the fallacy of missing different parts of the business while looking at the big picture. I will divide the company into five main sub-segments: 1) linear networks: the legacy broadcasting operations, 2) DTC: the new streaming services, 3) content sales/licensing: the studio segment and related distribution, 4) parks and experiences: theme parks and related revenue such as F&B, hospitality, and park merchandise, and 5) consumer products: Disney’s retail stores, merchandise, and licensed products. I believe that calculating an individual value for each segment reveals the fundamental value of the company much better than looking at historical multiples or comparing company level multiples to peers.\nI will analyze company valuation by breaking the financials apart and then multiplying them by appropriate multiples compared to appropriate peers. I will work on three scenarios using assumptions of various aggression: grey sky, base case, and blue sky. Take my work with a big grain of salt as it's more art than science. I will use my judgment in finding the correct multiple and peer group and my results will likely be biased by my view of the world. However, I’m very open to updating my work based on constructive criticism so please let me know if you have suggestions. I’m an owner of Disney stock and the true value of the company is important to me.\nAdditionally, I’m happy to share my work with anyone who wants it. Let me know if you do. Even breaking the financials apart is hours of work due to the uniquely terrible and inconsistent way that Disney reports segment results. Below are the inputs I’ll be using.\n\nLinear Networks Valuation\nI’m basing my linear networks work on EV/EBITDA and EV/Revenue multiples of the last twelve month values. I’m using broadcasting companies as my peer group. My grey and blue sky scenarios are the lowest and highest multiples in the peer group and my base case is the peer median. I’ve taken the initiative to award a higher-than-peer multiple in the base cases of many segments as I think that Disney’s incredible IP and power of its network and brand deserve it. But I didn’t on the networks segment as a) I don’t see a huge advantage over peers, and b) I wanted to be extra cautious on this segment as its future is in doubt. I’m calculating a $49 bn bear, $70 bn base, and $88 bn bull case valuations.\n\nDirect To Consumer Valuation\nThe DTC segment is the main one that will bring multiple expansion. It’s the AWS of Amazon and Azure of Microsoft. I’m using a peer group of streamers as well as B2C software subscription service vendors as I think that their dynamics are similar. I’m basing my work solely on the sales multiple as revenue is what’s most important for this group. My base case is a 3-turn premium to Netflix to adjust for Disney’s fast growth from nascent operations. Disney’s DTC revenues grew almost 60% YoY in its last quarter while Netflix grew less than 20%. I would say that this 3x premium to Netflix is even conservative and doesn’t sufficiently reflect the difference in growth. Moreover, Disney deserves a premium due to its greater IP. Disney’s content is best-in-class and can be watched and rewatched many times over. This moat will strengthen further as more of 21stCentury Fox content becomes available on the platform. In my opinion, the quality IP will translate into lower churn and higher customer lifetime value over time, and thus Disney’s current revenue is worth more than Netflix’s.\nMy bull and bear cases are the top and bottom multiples in the group. The calculation yields a bear case $60bn, base case $211 bn, and bull case $267 bn value.\n\nWhat is worth highlighting here is that even if Disney’s DTC offering fails as Sirius’ (SIRI) services did, they’re still worth >$60bn. And I want to state the obvious and say that this is an extremely unlikely scenario. First, the viability of Disney’s streaming offers has been proven by the recent demand, and it's almost certain that there’s a large room for it in the streaming market. And second, movie streaming is more profitable than music, especially for content owners. Disney doesn’t have to pay royalties to content producers as it produces the content itself. Its DTC operations are much more scalable than those of Spotify (SPOT) and Sirius and deserve much higher multiples.\nConsumer Products Valuation\nConsumer products division is often forgotten and bundled with parks. However, it’s a completely different business and should be looked at in isolation. Disney both operates its stores and licenses its merchandise globally. Merchandise sold in parks isn’t in this segment and is included in Parks & Experiences segment’s financials. My peer group here is of retailers or retail suppliers with strong brands and my chosen multiples are revenue and EBITDA.\nMy chosen multiple for my base case is that of RH (RH) as I think that the companies prime valuation suits that of Disney. RH has premium products and strong pricing power. Disney’s retail merchandise may not be premium the same way but it definitely has pricing power. Consumers will pay more for products with Disney characters’ logos on them. Disney also has growth potential in this segment leveraging the new content produced from studios. My low multiples are those of Build-A-Bear’s (BBW) peer group low and my peak multiples are once again RH for revenue but Callaway (ELY) for EBITDA. The results are $8 bn bear, and $33 bn, and $38 bn base and bull case valuations.\nThe chosen multiple yields\n\nContent Sales/Licensing Valuation\nThe content sales/licensing segment is the studios and related distribution. I’ve included Warner Music (WMG) due to the similarity in operations (producing content then distributing it) albeit in a different vertical. I will say that the peer group here isn’t perfect. Most large studios are consolidated into larger entities. I had to use the consolidated companies as peers which I don’t think is correct as the multiples for studios get diluted in the whole company. I’ve tried to adjust for this in my chosen multiples and give Disney a premium to peer average in my base case multiples. I went with peer low and high multiples for other cases.\nI chose to alter the valuation denominator for the entire group and use multiples over pre-pandemic values. I did this to cancel out the one-off effect of the pandemic and measure companies on their normal performance. Considering the backlog of releases that were delayed by the pandemic, I believe that a higher multiple is warranted. I choose Disney’s fiscal 2019 as the period which ends in September 2019 and adjusted peer multiples accordingly.\nThe valuation for the segment came out to be $18 bn, $41 bn, $65 bn for the three scenarios.\n\nParks and Experiences Valuation\nI’ve followed a similar method here to what I did in studios and used multiples over pre-pandemic values. Parks were also harmed by the pandemic, perhaps even more than movies. And the reopening will see even greater demand. People locked inside distancing for more than a year and a half will want to indulge themselves in travel. Many families will choose Disney parks. Even those that thought of it as expensive will likely indulge themselves. The reopening warrants a premium multiple.\nDisney deserves a premium on top of that. The company has amazing pricing power. They’ve raised prices by ridiculous amounts far outstripping inflation. Consumers still flock to the parks. The best-in-class IP combined give Disney’s parks unmatched appeal. The new content from studios has the power to fuel new growth. The parks of Disney deserve a significant premium to what other park operators trade at.\nI’ve used SeaWorld’s (SEAS) numbers as my bear case and built varying amounts of premia on top of that for the other scenarios. I believe that even higher multiples are more than fair given Disney’s advantages but I’ll stick with these as I want to remain on the conservative side of things. I get $116 bn, $132 bn, and $150 bn for the three scenarios.\n\nPutting it All Together Shows Significant Undervaluation\nCombining the values of 5 segments under the three scenarios yields $251 bn, $487 bn, and $609 bn in total EV. I want to account for the unallocated and shared OPEX which wasn’t reported in any of the segments. I multiply these costs by Disney’s current overall multiple and reduce them from the total EV. After reducing net debt as well I get implied market caps of $174 bn, $410 bn, and $531 bn for the three scenarios providing a 32% upside on the base case and a 44% loss and 72% gain on tail outcomes.\n\nI want to make a particular note here of the conservativeness of the analysis. The two most important segments’, DTCs and P&Es, bear cases are extremely bearish. I would think it improbable that Disney’s respective segments would trade at those multiples given today’s world. I think that the base case is highly achievable and that the blue sky scenario isn’t nearly as farfetched as the grey sky one and that it’s achievable as well.\nGiven the risk-reward to the upside, particularly considering the probabilities of the three scenarios, I’m a buyer of Disney with high conviction.\nThe Investment Comes with Large Execution Risk\nDisney may have huge potential but it has large execution risk as well. The largest portion of the valuation is tied to the nascent DTC operation. There is a lot that Disney needs to achieve to deliver on that front. I’m highly confident that it will. My belief is backed by the obvious demand for the content. I think that the company will be able to transfer at least some of its pricing power to the streaming business to make it a true software giant. However, if you don’t think that Disney will be able to deliver or that the future of the streaming industry is not as bright as valued for whatever reason, you may want to hold back.","news_type":1},"isVote":1,"tweetType":1,"viewCount":929,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":854349578,"gmtCreate":1635423539523,"gmtModify":1635423571408,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"[财迷]","listText":"[财迷]","text":"[财迷]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/854349578","repostId":"1119174849","repostType":2,"isVote":1,"tweetType":1,"viewCount":847,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":856404548,"gmtCreate":1635206022378,"gmtModify":1635206022488,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"What to buy before earnings?&nbsp;","listText":"What to buy before earnings?&nbsp;","text":"What to buy before earnings?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/856404548","repostId":"2178475607","repostType":2,"isVote":1,"tweetType":1,"viewCount":709,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":859841370,"gmtCreate":1634689109327,"gmtModify":1634695383176,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"This is the next best thing since Bitcoin itself. Watch out for other ETFs coming soon but due to Proshares being the first Bitcoin ETF, it may just be the market leader.&nbsp;","listText":"This is the next best thing since Bitcoin itself. Watch out for other ETFs coming soon but due to Proshares being the first Bitcoin ETF, it may just be the market leader.&nbsp;","text":"This is the next best thing since Bitcoin itself. Watch out for other ETFs coming soon but due to Proshares being the first Bitcoin ETF, it may just be the market leader.","images":[{"img":"https://static.tigerbbs.com/eafcbeaeaaa2e1405767c8fea2044a17","width":"1080","height":"3543"}],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/859841370","isVote":1,"tweetType":1,"viewCount":802,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":1,"langContent":"CN","totalScore":0},{"id":829105899,"gmtCreate":1633478419059,"gmtModify":1633478419128,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"<a href=\"https://laohu8.com/S/BDRY\">$Breakwave Dry Bulk Shipping ETF(BDRY)$</a>with YTD at 390% vs SP500's 14%, the wave is riding hight for this one.","listText":"<a href=\"https://laohu8.com/S/BDRY\">$Breakwave Dry Bulk Shipping ETF(BDRY)$</a>with YTD at 390% vs SP500's 14%, the wave is riding hight for this one.","text":"$Breakwave Dry Bulk Shipping ETF(BDRY)$with YTD at 390% vs SP500's 14%, the wave is riding hight for this one.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/829105899","isVote":1,"tweetType":1,"viewCount":639,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0},{"id":865979767,"gmtCreate":1632938821395,"gmtModify":1632938821506,"author":{"id":"4093999439023700","authorId":"4093999439023700","name":"DOLLARCAT","avatar":"https://static.tigerbbs.com/0fd437f238e3a34c28a35895e5129210","crmLevel":2,"crmLevelSwitch":0,"followedFlag":false,"idStr":"4093999439023700","authorIdStr":"4093999439023700"},"themes":[],"htmlText":"I am buying more.","listText":"I am buying more.","text":"I am buying more.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://laohu8.com/post/865979767","repostId":"1159395062","repostType":2,"isVote":1,"tweetType":1,"viewCount":383,"authorTweetTopStatus":1,"verified":2,"comments":[],"imageCount":0,"langContent":"CN","totalScore":0}],"lives":[]}