Rivians’ problems compounds into 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.