Tesla reported impressive production and delivery numbers on July 2nd, with 451,758 vehicles produced and 480,126 delivered, surpassing the consensus estimate of 406,600 deliveries by 18%.
However, the stock did not respond positively, reflecting a market that may have already priced in these results given Tesla's high valuation of approximately $1.5 trillion, or 15 times its trailing 12-month sales. In contrast, Rivian, with a market capitalization of $23.5 billion, has launched the R2, a mid-market SUV aimed at competing directly with Tesla's Model Y, which dominates this segment.
Historically, Rivian has only offered high-priced models, but the R2's introduction could shift competitive dynamics. Despite Rivian's potential, it is not yet profitable and is projected to burn through about $9 billion before achieving positive cash flow, raising concerns about future funding needs.
The author suggests a cautious investment approach, utilizing options strategies to capitalize on the current market conditions without directly chasing Rivian's stock after its recent rally. Specifically, they recommend selling RIVN August 21st 16 Puts and a TSLA July 31st 420/425 Call Spread to manage risk while navigating the evolving EV landscape