RIVN

Stock Performance: Rivian Automotive (RIVN) shares fell 6.54% on Thursday, reversing gains from a recent rally that had seen the stock reach a 52-week high, despite positive company news including a revenue beat and a new performance package for the CEO.

Impact of Interest Rates: The decline is attributed to macroeconomic factors, particularly hawkish comments from Federal Reserve officials about inflation, which have raised concerns about interest rates affecting Rivian's capital-intensive growth phase and future cash flow valuations.

Valuation Concerns: Rivian's current valuation and ambitious future profit targets are sensitive to interest rates, as higher rates decrease the present value of expected future cash flows, making the stock less appealing compared to immediate cash-generating assets.

Investment Options: For those interested in investing in Rivian, shares can be purchased through brokerage accounts, including fractional shares, while shorting the stock requires access to options trading platforms or brokers that allow short selling.

Rivian CEO's Potential Earnings: RJ Scaringe could earn up to $4.6 billion over the next decade if Rivian meets specific profit and share price targets set in a new compensation package, drawing comparisons to Elon Musk's pay plan at Tesla.

Founding Story: Scaringe and his father made significant financial sacrifices, including refinancing their homes, to fund the initial stages of Rivian, which he founded shortly after earning his PhD from MIT.

Initial Business Challenges: Scaringe's first project involved a hybrid sports car, but due to a lack of funding and investor interest, he pivoted to focus on electric pickups and SUVs, which he believed could have a greater impact on the auto industry.

Company Growth and Market Value: Rivian has raised over $10.5 billion from investors like Amazon and Ford, achieving a market value of over $20 billion, with Scaringe holding a 1.4% stake in the company.

Put Contract Overview: The $16.00 put contract for RIVN has a bid of 95 cents, allowing investors to buy shares at $16.00 while effectively lowering their cost basis to $15.05, presenting a potential 5% discount compared to the current price of $16.77.

Expiration Odds and Returns: There is a 64% chance that the put contract will expire worthless, which could yield a 5.94% return on cash commitment, or 43.34% annualized, referred to as YieldBoost.

Call Contract Overview: The $18.00 call contract has a bid of $1.00, and if shares are purchased at $16.77 and the call is sold, it could result in a 13.30% total return if the stock is called away by January 2026.

Expiration Odds for Call: The call contract has a 52% chance of expiring worthless, allowing the investor to keep both the shares and the premium, potentially yielding a 5.96% extra return or 43.53% annualized, also termed YieldBoost.