The electric vehicle (EV) industry has surged in the past couple of years, as evident by the Global X Autonomous & Electric Vehicles ETF (DRIV) 28.9% gain since the beginning of 2021. In addition, the global EV market is projected to reach $802.81 billion by 2027, expanding at a CAGR of 22.6%, Allied Market Research reports. 

Today I’ll analyze and compare two popular electric vehicle stocks, Rivian Automotive, Inc. (RIVN) and Nikola Corp. (NKLA).  Based in San Jose, California, RIVN develops and manufactures electric pickup trucks and sports utility vehicles. The company recently went public through a traditional IPO by selling 153 million shares at $78.00 per share. Shares of RIVN are currently trading at about  $118, up around 51% over its IPO price. 

NKLA is an Arizona-based company that engages in the development of electric semi-trucks. It also owns the energy business. Year-to-date (YTD), NKLA stock is down about 30%. 

Recent Developments 

On December 6th, Wall Street analysts initiated coverage of RIVN on a highly optimistic note. For instance, Wedbush analyst Dan Ives established a “Buy” rating with an average price target of $130. Bank of America analyst John Murphy set the $170 price target on Rivian. Analysts have also appreciated Rivian’s partnership with Amazon, which ordered 100,000 delivery trucks from Rivian.

On October 14th, Nikola Corporation announced that it had entered into a collaboration agreement with PGT Trucking, Inc. by signing a Letter of Intent to lease 100 Nikola Tre heavy-duty fuel cell electric vehicles (FCEVs). Under the terms of the deal, Nikola is obligated to perform scheduled maintenance and hydrogen fueling solutions. Deliveries of the FCEVs to PGT are expected to begin in 2023. 

Recent Financial Performance & Analysts Estimates

Rivian Automotive is scheduled to release earnings for its fiscal third quarter on December 16th. Hence, let’s take a closer look at Rivian’s S-1/A filing. In the first half of 2021, the company hasn’t generated any material revenues as it was in the development stage. Vehicle production and deliveries started in September 2021. On the expenses side, its total operating expenses have increased 159.84% year-over-year to $990 million in 1H2021 primarily due to increasing Research and Development expenses and General & Administrative costs. It translated into Rivian’s net loss increasing by 163.66% to $994 million. 

Analysts expect RIVN’s EPS to stand at ($6.84) for its current quarter, while Q3 revenues to be $1.03 million. However, analysts project for the company to deliver solid top-line numbers of $3.53 billion in 2022. 

When it comes to Nikola Corporation, the company did not generate any revenues during the fiscal third quarter, which ended September 30th, 2021. The company reported a Non-GAAP EPS of ($0.22), beating analysts’ consensus by $0.16. 

The company’s Adjusted EBITDA loss stood at $85.02 million compared to $58.75 million in Q3 2020, which could be considered a red sign. Besides, its net loss increased to $267.57 million, representing an enormous year-over-year increase of 235.7%. However, there were some positive signs as well. For instance, the company plans to deliver up to 25 Tre BEV trucks by the end of the year. 

For the next quarter, analysts project RIVN’s EPS to be ($0.42), representing a 10.08% year-over-year decrease. Its revenue for the fourth quarter of 2021 is expected to stand at $2.57 million.

Bullish‌ ‌Options‌ ‌Bets‌ ‌Placed On RIVN Stock 

During the December 7th trading session, there was a purchase of 2,874 $260.00 March 18th, 2022, call options for $4.30 per contract. Moreover, this transaction brings the total number of open contracts to 5,431 (source: barchart.com). A buyer of those calls needs Rivian stock to rise to $264.30 by the expiration date to break even. That’s an immense upside potential of about 131% from Rivian’s current price. 

The Bottom Line 

I believe that RIVN is a better investment than NKLA at these levels. RIVN has received a lot of bullish forecasts from Wall Street analysts. In addition, its partnership agreement with Amazon strengthens the company. RIVN expects to generate its first meaningful revenue in 2022, which should significantly boost its value. Finally, options market activities suggest a solid upside opportunity for RIVN stock in the coming months. 

RIVN shares were trading at $116.00 per share on Thursday afternoon, down $6.12 (-5.01%). Year-to-date, RIVN has gained 15.16%, versus a 26.52% rise in the benchmark S&P 500 index during the same period.

About the Author: Oleksandr Pylypenko

Oleksandr Pylypenko has more than 5 years of experience as an investment analyst and financial journalist. He has previously been a contributing writer for Seeking Alpha, Talks Market, and Market Realist. More...

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