24/7 Insights
- Volkswagen’s investment in Rivian Automotive Inc. (NASDAQ: RIVN) has not made it a better stock.
Over the past three years, it has been hard for investors to find a more horrible stock than Rivian Automotive Inc. (NASDAQ: RIVN). It recently rallied 23% on news of an investment from Volkswagen that may eventually total $5 billion. It had a market value of $15 billion at the end of the day. However, on the day it went public, November 10, 2021, its market cap was $86 billion. It would be hard to find a company with management that could wipe out $70 billion in shareholder value, destroying the share value of an untold number of investors. Management should end up in some public stock hall of shame.
Rivian has lost tens of billions of dollars, which included over $1.4 billion in the most recent quarter. Quarter after quarter, it showed results of tiny unit sales for this cash destruction. In the latest quarter, that was 13,588 vehicles. Large car companies sell more vehicles than that in a day. Management said it would produce 57,000 in 2024, which means financial losses will not end and may not have if VW did not come to the rescue.
Rivian had the wildly wrong idea that it could sell electric pickups for $72,000 in a market in which consumers said they were worried electric vehicles (EVs) were priced too high. It also offered SUVs at prices of $80,000. The idea was a failure at the start. Combine it with Americans’ anxiety about EV range and the number of charging stations, and Rivian never had a chance.
VW will pick over Rivian’s bones to find its best software. It is the only reason the world’s second-largest car company put up what may be $5 billion, and may be less.
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