Rivian's Shocking Plunge: Investors Lose Faith in Electric Vehicle Newcomer
Rivian Automotive Inc.'s falling share prices suggests that investors have given up on the company's ability to compete in the crowded electric vehicle market.
After its debut in late 2021, Rivian's market capitalization of over $150 billion has fallen by 93% to less than $12 billion, reflecting almost no value beyond its cash reserves.
Rivian, like other EV startups, lacks the cost savings of large-scale production, making it difficult to compete with established car companies such as Tesla.
Raising capital to fund larger scale operations has become increasingly difficult due to tightening monetary policy from the Federal Reserve.
Analysts are cutting their bullish ratings on Rivian, citing dimming prospects for profit margins.
Despite 13 buy ratings, seven holds, and two sells, revenue projections for the first quarter have fallen over 25% since December 2021.
Ford's electric version of the F-150 model, which starts around $60,000 is more desirable for consumers compared to the company's R1T pickup truck which currently starts at $73,000.
Until Rivian can achieve more production and better margins on sales, it is likely to remain a niche brand.
Piper Sandler's Potter estimates that Rivian will need to raise over $4 billion to fund growth beyond 2025.