So you jumped on the Rivian bandwagon in late 2021 when the buzzy electric vehicle startup had the hottest IPO of the year. The company making waves with its slick R1T truck and R1S SUV seemed poised to be the next Tesla and capture the world‘s imagination around EVs. You watched with delight as Rivian‘s share price nearly doubled from its IPO price in the heady days after listing.
But your enthusiasm soon turned into hand-wringing as the stock took a gut-wrenching turn downward and kept plunging further. All the promise and potential now seems dashed, having lost over 90% from the highs reached briefly last year.
What happened to the darling that was supposed to revolutionize electric adventure vehicles and give Elon Musk sleepless nights? Let‘s take a closer look at the factors that brought Rivian back down to earth with a thud.
Rivian Had the Pedal to the Metal Coming Out the Gate
Rivian was founded in 2009 by MIT alum and engineer RJ Scaringe to commercialize electric powertrains integrated into rugged, off-road capable vehicles. Scaringe assembled an executive team from across the auto industry veterans along with securing billions in funding from heavyweight backers like Ford and Amazon.
The company adopted an asset-light business model by using a modular skateboard architecture housing components that could be utilized across different vehicle platforms. This allowed for flexible manufacturing without gigantic capital investments.
Key Company Milestones:
- 2019: Rivian unveils R1T pickup and R1S SUV models to rave reviews regarding design, performance and range
- April 2021: Closes $2.65 billion funding round led by T. Rowe Price, Amazon, Ford
- September 2021: Starts production of R1T models as the first electric truck available
- November 2021: Historic IPO raises nearly $12 billion, stock price spikes over 100%
Rivian captured the zeitgeist around EV trucking by beating traditional automakers with the first entrant in a red-hot segment. But irrational exuberance around growth prospects sent its valuation into the stratosphere.
Gravity Took Over and Brought the High-Flyer Back to Earth
Being first to market with a well-received electric truck meant little with regards to having a viable business. And the misplaced euphoria among retail investors over Rivian soon gave way to reality checks.
The confluence of production stumbles, executive departures, broader market turmoil and competitive pressures plunged the once shining star down from the heavens:
- Supply chain crises limiting manufacturing ramp-up
- May 2022 steering issue forcing recall of all vehicles delivered
- Uncertainty from consumer discretionary slowdown and rising interest rates
- Key personnel losses signals instability
This triple whammy represented an existential crisis for Rivian. Let‘s examine how promises unraveled through some key financial metrics:
| Metric | At IPO (Nov 2021) | Current (Dec 2022) | Change |
|---|---|---|---|
| Market Cap | $100+ billion | $10 billion | Down 90%+ |
| Cash on hand | $16 billion | $13 billion | Down 20% |
| Stock price | $179 | $13 | Down 93% |
| 2022 production target | 50,000 vehicles | ~15,000 vehicles | -70% miss |
Teething troubles combined with recessionary fears crushed Rivian‘s stock from overvalued to likely undervalued levels currently.
Where Does Rivian Go From Here?
While still burning cash with production costs exceeding revenue, Rivian is poised to ride the inevitable upturn in appetite for EV offerings. They retain unique strengths that cannot be easily replicated:
- Proprietary skateboard platform: Provides base for multiple models using common parts
- Flexible manufacturing: Asset-light approach avoids huge fixed costs
- Compelling products: R1T and R1S take the pickup/SUV experience into the sustainable age
With the recent $13.5 billion in new funding secured, Rivian has ample liquidity to fuel expansion initiatives. The second Georgia manufacturing site will dramatically boost production capacity by 2024. Founder RJ Scaringe also purchased $5 million worth of stock to reinforce long-term confidence.
Surviving the body blows of its brutal stock plunge, Rivian still has room to leverage its platform advantages and brand equity to emerge as a leader in electrifying the pickup market. Staying humble and focused on efficient ramp-up provides a playbook to rebuild investor trust.
So while the stomach-churning drop has given many shareholders motion sickness, having a strong conviction in Rivian‘s future potential can eventually help get back on the road to recovery. Just remember to buckle those seatbelts tight.
