Rivian May Lose Nasdaq 100 Spot After 90% Selloff, JPMorgan Says

[Count Orlok]

Rivian May Lose Nasdaq Spot After 90% Selloff, JPMorgan Says

Rivian May Lose Nasdaq Spot After 90% Selloff, JPMorgan Says

June 1, 2023

(Bloomberg) — Shares of Rivian Automotive Inc., the money-losing electric vehicle startup, may get pushed out of the Nasdaq 100 Index as early as this month after plunging more than 90% from their record high, according to JP Morgan Securities.

The index typically removes the smallest members of the Nasdaq 100 if the company is weighted at less than 0.1% of the gauge for two consecutive months, JPMorgan analyst Min Moon writes in a note on Thursday. As Rivian was below 0.1% as of April 28 and May 31, Moon expects the carmaker to be excluded from the index on the third Friday of June.

ON Semiconductor is ranked at the top of the eligible companies to replace the EV maker, Moon added.

A removal from the index would deal another blow to a stock that’s been pummeled since soon after its November 2021 initial public offering.

After briefly riding the frenzy for all things related to electric cars, Rivian’s shares started unraveling. Investors soured on risky growth names, correctly anticipating the Federal Reserve would raise rates to arrest inflation, in turn slowing the economy and making sales of an expensive electric pickup truck less likely.

Representatives of Rivian and Nasdaq declined to comment on Thursday.

Rivian shares fell as much as 4.8% to $14.02 on Thursday in New York, but later pared most of the losses to trade down 0.1% by 1:54 p.m. That takes the stock down 20% just this year, compared to another EV startup Lucid Group Inc.’s 5.4% decline. Meanwhile, industry leader Tesla Inc.’s stock has risen 68% over the same period.

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[Jayhawkeye]

No bueno.

 

[mkg3]

its because the management team has not met institutional investor/analysts expectations. If they had, the production increase alone would have this stock 2x of where they are now and would not be in this situation.

It's fixable if and when Rivian starts actively managing investor expectation significantly. It's sort of like having "Stories" for analysts.

Just today, RJ was on Bernstein 39th Annual Strategic Decisions Conference. It's a start. So was ask anything to RJ last Friday. They need to have Investor Day and be on all the biz channels talking up what Rivian is doing.

 

[SciGuy]

Funds that track to this index will have to sell and hit the stock harder. I’ll be buying more at that point.

 

[zer0t]

Funds that track to this index will have to sell and hit the stock harder.

This was my first thought as well.

 

[SeaGeo]

its because the management team has not met institutional investor/analysts expectations. If they had, the production increase alone would have this stock 2x of where they are now and would not be in this situation.

Over the last year, where have the significantly missed on production guidance?

In contrast, how has Lucid done with production, and how has Tesla done on getting FSD in it's final form which was the primary selling point Tesla has pitched to being valued like a tech company? Where's the CT and roadster been? Tesla has routinely missed their own guidance on production related to getting new products out the door.

Quoting YTD and comparing to TSLA is an awfully convenient point in time to choose for their stock price:

Since Rivian went public, they're down nearly 90%. Obviously not great. Meanwhile, Tesla is down 45%. Not great for a profitable company that's supposed to be printing cash off FSD and energy. it doesn't appear that holding parties labeled as investor days has done much to help the keep TSLA afloat since their performance among car stocks is middle of the pack since Rivian IPOd despite having such large margins per vehicle.

RJ and Claire have had several known interviews and investor presentations over the last year or two, and he seems to like to talk to CNBC.

 

[mkg3]

Over the last year, where have the significantly missed on production guidance?

In contrast, how has Lucid done with production, and how has Tesla done on getting FSD in it's final form which was the primary selling point Tesla has pitched to being valued like a tech company? Where's the CT and roadster been? Tesla has routinely missed their own guidance on production related to getting new products out the door.

Quoting YTD and comparing to TSLA is an awfully convenient point in time to choose for their stock price:

Since Rivian went public, they're down nearly 90%. Obviously not great. Meanwhile, Tesla is down 45%. Not great for a profitable company that's supposed to be printing cash off FSD and energy. it doesn't appear that holding parties labeled as investor days has done much to help the keep TSLA afloat since their performance among car stocks is middle of the pack since Rivian IPOd despite having such large margins per vehicle.

RJ and Claire have had several known interviews and investor presentations over the last year or two, and he seems to like to talk to CNBC.

Rivian originally projected 45K~50K vehicles produced in their first year. The pandemic and supplier issues caused them to cut that number to 25K.

Rivian did not hit 25k last year - they fell short by few ending up in north of 24K. Still a miss. For 2023, analysts were expecting more than 50k. If Rivian had guided to 60K, as in the internal goal, they probably would have fared better from investor community.

If you go back and look at those two items alone, you'll see that the stock price took a hit both times. This happens to almost all companies. Meeting official guidance by the company but missing the whisper expectations results almost always in a selloff.

Further, who's comparing with Tesla in this thread, besides you?? No one in the investment community makes any comparison between the two. Tesla has market cap of near $700B, Rivian is near $14B, or 50x smaller than Tesla. Tesla produces projected 1.8m vehicles this year, Rivian forecasts 50k, or 36x less. Tesla has the highest gross margins in the industry and is profitable, Rivian is not profitable (yet). Really need to stop comparing to Tesla. It's comparing apples to oranges.

Most companies hold investor day to inform and persuade the Wall Street, institutions and other stakeholders about what the company is doing and articulating their strategy for going forward. Again is an attempt to manage expectations of others.

Rivian has its own issues and they need to address them. The whole thread is about potential removal from index, which will result in a selloff by the ETFs that mirror the index. The fortunate thing is that NASDQ index ETFs are much smaller than S&P index ETF so the impact will not be as great as the companies being dropped from S&P500 index.

 

[SeaGeo]

Rivian originally projected 45K~50K vehicles produced in their first year. The pandemic and supplier issues caused them to cut that number to 25K.

Rivian did not hit 25k last year - they fell short by few ending up in north of 24K. Still a miss. For 2023, analysts were expecting more than 50k. If Rivian had guided to 60K, as in the internal goal, they probably would have fared better from investor community.

If you go back and look at those two items alone, you'll see that the stock price took a hit both times. This happens to almost all companies. Meeting official guidance by the company but missing the whisper expectations results almost always in a selloff.

Further, who's comparing with Tesla in this thread, besides you?? No one in the investment community makes any comparison between the two. Tesla has market cap of near $700B, Rivian is near $14B, or 50x smaller than Tesla. Tesla produces projected 1.8m vehicles this year, Rivian forecasts 50k, or 36x less. Tesla has the highest gross margins in the industry and is profitable, Rivian is not profitable (yet). Really need to stop comparing to Tesla. It's comparing apples to oranges.

Most companies hold investor day to inform and persuade the Wall Street, institutions and other stakeholders about what the company is doing and articulating their strategy for going forward. Again is an attempt to manage expectations of others.

Rivian has its own issues and they need to address them. The whole thread is about potential removal from index, which will result in a selloff by the ETFs that mirror the index. The fortunate thing is that NASDQ index ETFs are much smaller than S&P index ETF so the impact will not be as great as the companies being dropped from S&P500 index.

The cut projections once. Since that point in time, they've been very close. For example, the 24.x vs 25k was literally the definition of factor gated vs not.

They announced production on 1/3/23, and they were up on 1/4/23. They took a hit on 3/1, which like you said may have been due to estimates of institution investors that were above guidance. If Rivian had issued guidance of 60k, which they obviously don't believe is the appropriate estimate, and missed it, they would take a hit.

Your suggestion of having an investor days appeared to be a pretty obvious reference to Tesla.
They have worked to manage expectations through having several institutional investor Q&As and interviews of both Claire and RJ seems to be ignoring the point.

My point is that your hypothesis that their stock price would be 200% of where it is by solely having investor days doesn't appear to hold water. Would they do better if they managed expectations better? Sure. Would the stock do better if they weren't losing money hand over fist during a time frame when money isn't free, yes.

Is the stock in good condition? No. We all agree there.

 

[SANZC02]

Rivian originally projected 45K~50K vehicles produced in their first year. The pandemic and supplier issues caused them to cut that number to 25K.

Rivian did not hit 25k last year - they fell short by few ending up in north of 24K. Still a miss. For 2023, analysts were expecting more than 50k. If Rivian had guided to 60K, as in the internal goal, they probably would have fared better from investor community.

If you go back and look at those two items alone, you'll see that the stock price took a hit both times. This happens to almost all companies. Meeting official guidance by the company but missing the whisper expectations results almost always in a selloff.

Further, who's comparing with Tesla in this thread, besides you?? No one in the investment community makes any comparison between the two. Tesla has market cap of near $700B, Rivian is near $14B, or 50x smaller than Tesla. Tesla produces projected 1.8m vehicles this year, Rivian forecasts 50k, or 36x less. Tesla has the highest gross margins in the industry and is profitable, Rivian is not profitable (yet). Really need to stop comparing to Tesla. It's comparing apples to oranges.

Most companies hold investor day to inform and persuade the Wall Street, institutions and other stakeholders about what the company is doing and articulating their strategy for going forward. Again is an attempt to manage expectations of others.

Rivian has its own issues and they need to address them. The whole thread is about potential removal from index, which will result in a selloff by the ETFs that mirror the index. The fortunate thing is that NASDQ index ETFs are much smaller than S&P index ETF so the impact will not be as great as the companies being dropped from S&P500 index.

Just curious, can you show us where Rivian ever stated they would deliver 50k vehicles in 2022? There were a couple of analyst said they cut the number in half but I’ve never been able to find Rivian ever saying they would do 50k in 2022.

This is the closest I can find but in my opinion people either misread this or intentionally reworded it but I have only ever found this projection of 25k in 2022.

 

[COdogman]

I guess RJ should hold regular events where he stands on the stage and lies about everything to appease Wall Street. That seems to work for Tesla. Maybe he could also dress a person in a robot suit and have them dance around while he talks.

 

[Count Orlok]

I guess RJ should hold regular events where he stands on the stage and lies about everything to appease Wall Street. That seems to work for Tesla. Maybe he could also dress a person in a robot suit and have them dance around while he talks.

I vote for this robot...

 

[COdogman]

I vote for this robot...

It is a very sexy robot.

 

[Donald Stanfield]

I guess RJ should hold regular events where he stands on the stage and lies about everything to appease Wall Street. That seems to work for Tesla. Maybe he could also dress a person in a robot suit and have them dance around while he talks.

RJ also needs to take deposits for the Rivian spaceship edition with super secret rocket boosters on it for between 50 and 250K dollars. Then just forget about building it.

 

[Craigins]

Rivian originally projected 45K~50K vehicles produced in their first year. The pandemic and supplier issues caused them to cut that number to 25K.

This will piss me off forever. 50k was a random analyst projection made by someone who did not read the IPO documents.

The closest Rivian came to that number was when RJ allued to completing existing preorders by the end of 2022. However if you look at the stated production ramp up (100% factory production rate by the end of 2023) that made no sense. Many people believe he meant Launch editions. The S1 documents did not state the 50k by the end of 22 either.

I wish people would stop spreading this lie.

 

[mkg3]

The cut projections once. Since that point in time, they've been very close. For example, the 24.x vs 25k was literally the definition of factor gated vs not.

They announced production on 1/3/23, and they were up on 1/4/23. They took a hit on 3/1, which like you said may have been due to estimates of institution investors that were above guidance. If Rivian had issued guidance of 60k, which they obviously don't believe is the appropriate estimate, and missed it, they would take a hit.

Your suggestion of having an investor days appeared to be a pretty obvious reference to Tesla.
They have worked to manage expectations through having several institutional investor Q&As and interviews of both Claire and RJ seems to be ignoring the point.

My point is that your hypothesis that their stock price would be 200% of where it is by solely having investor days doesn't appear to hold water. Would they do better if they managed expectations better? Sure. Would the stock do better if they weren't losing money hand over fist during a time frame when money isn't free, yes.

Is the stock in good condition? No. We all agree there.

You seem to have taken things out of context in my first post. Never claimed having investor day will fix the problem. It was mentioned, along with RJ attending a strategic decision talk on Friday and also ask any question on Friday before, as examples.

Mentioning investor day DOES NOT make any reference to Tesla. Many companies do this. JPM Chase just had one recently, as an example. It's a generic term used to inform and persuade opinions.

My point is that if Rivian did a better job managing expectations, they be far better off. Stock price wold reflect that too. Investor community has little faith in Rivian turning a profit at the rate they are going. If Rivian believe they can with the current plan and the roadmap, then they need to do a better job informing why that is.

I hold decent amount of Rivian stock, as well as Tesla, amongst others so I have a vested interest in these companies do well. No I was not a pre-IPO holder with a lockup restriction so I was able to buy at $100/share and sell at $170/share. Since then, my average cost of Rivian is in the $40s/share for the current holdings.

As a Rivian investor, I have noticed that the investor community change their tone over time and turn very negative. One can blame the pandemic and macroeconomic conditions, but within those constraints, there are companies doing better than Rivian in terms of how they characterize the situation.

I still hold onto Rivian stock because in the long run, I believe the company will either succeed as expected, or be taken over by someone at a much higher price than today. For now, Rivian is a dead money to me.

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