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Rivian Automotive Stock is One Risky EV Play

October 3. 2021. 6 mins read

Investing in what you know isn’t just about understanding the value proposition on offer. It also involves vetting business models to determine their complexity. On the lower end of the complexity spectrum would be a software-as-aservice (SaaS) business model which constitutes some software that lives in the cloud and is accessible via subscription. On the higher end would be a full-stack electric vehicle manufacturer which represents extreme levels of risk, especially when they’re being run by someone known for acting erratically.

A ten year return chart for Tesla stock
Credit: Yahoo Finance

What you see above is the ten-year stock chart for Tesla, a company that’s rewarded investors with a +15,337% return over the past decade. There are two ways to perceive this outsized return:

  • Risk-averse investor: The likelihood of Tesla succeeding was so low that investors who believed in it were highly compensated for taking all that risk.
  • Risk-hungry investor: Tesla shows us the potential of the electric vehicle investing thesis. Where can I find “the next Tesla?”

We fall in the risk-averse camp, so we wouldn’t consider touching any electric vehicle stock unless they’ve crossed what one bee school professor calls “the production hell chasm.” Lordstown Motor is a great example of why you need more than a team with a dream to become a succes

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