Rivians' problems compounds into 2022 - The Average Joe

    Rivians’ problems compounds into 2022

    Victor Lei — Head of Research

    January 12, 2022

    rivian

    January 12, 2022

    Yesterday, Rivian, the hyped electric truck maker, announced the departure of its chief operating officer — adding more pain for the largest IPO in 2021.

    What’s the big deal? Shortly after going public, Rivian — with zero sales at that point — surged 70% — making it larger than Ford and General Motors.

    Since November, Rivian is down over 50% — free-falling alongside other speculative stocks — except Rivian’s problems go beyond general market conditions:

    • Production fell short of estimates — with 1,015 vehicles manufactured in 2021 — short of its 1,200 goal.
    • Last week, Amazon, Rivian’s largest investor and customer — placed an electric delivery truck order with competitor, Stellantis.

    The dependence on Amazon was a clear risk with Rivian going into its IPO. Another red flag was an overly expensive valuation — backed by little results — making it prime meme material.

    Playing catch up: Rivian’s competing in a competitive market with several carmakers releasing their own electric truck:

    • Ford is expected to begin shipping its highly anticipated F-150 pickup truck in the first half of 2022.
    • Tesla’s cybertruck is expected to begin production in 2022.

    Investors beware — more selling pressure could come for Rivian in the following months as:

    • Pre-IPO (insider) shares become available to sell in May 2022.
    • Growth and speculative stocks remain at the mercy of rising interest rates.

    Stocks trending down can often fall further than investors expect — and in many cases, buying them before they’ve found support can be a costly mistake.

    “What do you call a stock that’s down 90%? A stock that was down 80% and then got cut in half.” — David Einhorn.

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