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If you bought inventories from Rivian Automotive (NASDAQ: RIVN) at or near your peak in mid-November, it’s been a bad week for you. IPO. And, unfortunately, I don’t see riVN inventory coming back anytime soon.
Rivian’s gigantic initial public offering gained a lot of publicity. The company’s market capitalization outpaced General Motors (NYSE: GM) and Ford (NYSE: F) as inventories rose 130% in a matter of days. to increases of one and has been more commonly down ever since.
Now that the initial has faded, what do we have left?
So while I’m very inspired by the launch of Rivian, and its connection to Amazon (NASDAQ: AMZN), I’m going to leave this one.
Irvine, California-based Rivian debuted on Nov. 10, setting up an initial public offering worth $78, giving the company a valuation of $66. 5 billion. (NYSE: FB), went public in 2012.
One of the reasons Rivian attracted so much interest from investors is its deal with Amazon. The online retail giant has a 20% stake in the company and has already ordered 100,000 Rivian electric delivery vans for its fleet. Ford is also among Rivian’s biggest sponsors, with about 12 percent.
Perhaps the most exclusive thing about Rivian is its skate technology. As Motley Fool contributor Will Ebiefung states, “The company is based on a modular chassis design called a ‘skateboard’, which houses the battery and other parts in a single unit. which can adapt to all its diversity and be sold to other car manufacturers. “
The skateboard chassis will allow Rivian to expand its operations faster as it simplifies the chain.
Another explanation for why investors were so enthusiastic about Rivian’s backlog of pre-orders reported through the company before its IPO. As of Oct. 31, the company had a backlog of 55,400 pre-orders. By that time, it had delivered 156 of its vans and declared itself on track to ship 1,000 cars by the end of the year.
However, according to several media reports, Rivian has alerted consumers that the R1S SUV will be delayed by several months. Instead of receiving its cars in January, Rivian tells consumers that the first deliveries will be made in May or June.
Production problems do not surprise me. It is not unusual for a company to grow in power. Tesla (NASDAQ: TSLA) is the best example and look at it now.
But it takes time to succeed on those kinds of problems. If you bought RIVN shares in hopes of getting a quick return, you will be out of luck.
Suppose you need an electric van to use in your work. Are you going to spend $70,000 on an electric Rivian or buy a Ford F-150 Lightning for less than $40,000?GM’s electric Chevy Silverado is also expected to sell well below $70,000. The owner of a smart business would be the Ford or GM product, which is expected to launch in 2022-2023, and invest the rest of the cash in its business.
RIVN shares remain overvalued even after its decline and are expected to continue to fall for the foreseeable future. If you’re in favor of a short-term investment, it’s more productive to look elsewhere for profit.
At the time of publication, Patrick Sanders, a TSLA stock client. The perspectives expressed in this article are those of the author, the subject of InvestorPlace’s publication Guidelines. com.
Patrick Sanders is an independent publisher in Maryland and, from 2015 to 2019, led the investment advisory segment at U. S. News.
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