Rivian in a Downward Spiral
Rivian (NASDAQ: RIVN) was the largest IPO in 2021 — a lot has changed since then. The company is down 69% from its IPO price.
Electric vehicle manufacturer Rivian was the talk of the town in the early fall of 2021. The company was preparing to go public on November 21. The hype surrounding the company was very real. Rivian set its IPO price at $78 per share and was able to raise nearly $12 billion from its market debut. At that time, the company’s valuation soared to $90 billion.
This past Monday, Ford Motor (NYSE: F) reported that it would be selling its 8 million Rivian shares. Rivian’s lockup period expired on Sunday, which gives insiders and early investors to sell their shares. This sell-off hasn’t helped an already beaten-down Rivian. Shares are trading near $24 per share as I write this — a 13% drop from Friday’s closing price of $28.79.
What made this company stand out from the rest of the EV manufacturers was it designed pickup trucks, SUVs, and delivery vans. Rivian has a partnership with Amazon (NASDAQ: AMZN) to deliver 100,000 EV delivery vans by 2030. This was one of the selling points for Rivian at the time that it was marketing its public debut to potential investors. According to the Securities and Exchange Commission (SEC), as of December 31, 2021, Amazon owned 17.7% and Ford owned 11.4% of Rivian.
The company had lucrative deals and partnerships and is expected to deliver a product to one of the biggest e-commerce companies — Amazon. Not to mention the company was being marketed as being the next Tesla. Back in November, many investors wanted a piece of Rivian, and that was obvious when Rivian’s IPO became the biggest of 2021.
A Bigger Problem for Rivian?
Rivian is expected to announce its most recent quarterly earnings tomorrow, May 11, 2022. Its previous quarterly earnings report didn’t meet expectations. The company reported a revenue of $54 million — missing expectations by $6.7 million. Rivian has set the goal to produce 25,000 vehicles in 2022, which could prove to be a challenge for the company. Momentum for Rivian shares didn’t stick around for long. As we’re all aware, 2022 has been a difficult year so far. Market volatility, high inflation, and geopolitical conflicts have affected the markets. Many companies are still being affected by supply chain disruptions and inflation.
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Supply chain disruptions are expected to continue into the rest of 2022. Rivian might not be the only electric vehicle manufacturer that’ll need to reevaluate production output and 2022 expectations because of these supply chain disruptions which have been causing semiconductor shortages. Semiconductors are the heartbeat of electric vehicles.
According to Kelley Blue Book, U.S. electric vehicle sales rose 76% in the first quarter. Consumers and the U.S. government are bullish on EVs. And with semiconductor shortages and high demand, this could create some big issues for EV manufacturers. Semiconductors are a crucial component not just for electric vehicles but also for technology devices, health care, computing, military systems, and communications… just to name a few. McKinsey & Company reported that it's the ideal time to be a semiconductor company — stating that the annual revenue increased by 9% in 2020 and by 23% in 2021. Additionally, semiconductor companies have been delivering an annual average of 25% in total shareholder returns (TSR) from the end of 2015 to the end of 2019.
How to Fix the Heartbeat of EV Industry
America used to be a leader in semiconductor manufacturing. However, over the decades, the U.S. began outsourcing production to companies in Asia to save costs. While it seemed efficient and cost-effective, when the pandemic hit, all that changed. Supply chains got blocked up, mostly because of COVID-19 lockdowns and regulations in other countries that the U.S. had no control over.
The problem continues to grow, and many are predicting that these shortages and supply chain issues won’t subside until 2023. It has forced the U.S. to reevaluate its reliance on foreign suppliers, which has led to the government attempting to bring semiconductor manufacturing back to the U.S. and providing companies with initiatives for making this happen. There’s only one U.S.-owned and -based company that’s currently capable of making custom chips for America’s top companies and our military.
This company is virtually unknown and has the opportunity to be at the very center of America’s push toward domestic chip production. That would set up potential investors for a once-in-a-lifetime opportunity. The government has already been pouring cash into this company because of its impressive position in its industry.
This company is on the path to massive profits because of the growing demand. Find out the details about this company and what makes it unique.
Here’s your free access to everything you need to know about how this company is ready to reap the rewards of the booming EV industry along with many other growing industries.
Until next time, Monica Savaglia Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.
Until next time,
Monica Savaglia is Wealth Daily’s IPO specialist. With passion and knowledge, she wants to open up the world of IPOs and their long-term potential to everyday investors. She does this through her newsletter IPO Authority, a one-stop resource for everything IPO. She also contributes regularly to the Wealth Daily e-letter. To learn more about Monica, click here.
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