The darling of the electric vehicle world at the end of 2021, Rivian is facing a hard reality in the new year after its shares have tumbled more than 20%, falling below its initial public offering price, since Wednesday.
Rivian RIVN shares fell 11% on Wednesday following news of an Amazon agreement to purchase battery-electric Ram ProMaster vans from Stellantis. The stock had fallen as much as 16% in midmorning trading Thursday below its IPO price of $78 before clawing back some of the losses later in the morning. As of 11:30 a.m., ET, Rivian was trading at $82.03 a share, down more than 8% from Wednesday's close.
The stock is down more than 50% from its Nov. 16 high of $181.
Rivian started falling on Wednesday after Amazon and Stellantis, formerly known as Fiat Chrysler, announced the e-tailer would be the first commercial customer for the ProMaster BEV in 2023. There was no number of vehicles released, but Stellantis has long provided commercial vehicles to Amazon around the world, including ProMaster vans, Fiat Ducato vans, and Peugeot and Citroen light commercial vehicles.
Amazon AMZN is Rivian's largest customer and backer, having invested nearly $1.3 billion in the startup and testing Rivian vans since March 2021 in the San Francisco area. The vans, which feature a 150-mile range on a single charge, three levels of shelving with a bulkhead door that can be opened and closed for additional driver protection while on the road, and a suite of highway and traffic assist technologies are being driven by Amazon employees.
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Amazon is the largest shareholder in the electric vehicle company with nearly a 20% ownership stake and has already ordered 100,000 of the company's electric vans with plans to have 10,000 on the road this year and the remainder by 2030. Some reports have said that number could rise significantly in the years to come.
When Rivian went public on Nov. 10, 2021, its stock skyrocketed, opening at $106.75 per share and trading as high as $119.45 per share for a market cap of $109.59 billion. For comparison purposes, it took Tesla TSLA 10 years before it crossed the $100 billion market cap. Only six companies — Alibaba, Visa, ENEL SpA, Facebook, General Motors and Deutsche Telekom — have had larger U.S. IPOs, according to Bloomberg.
Its strong debut caused analysts to predict great things for the company.
Wedbush analyst Daniel Ives set a price target of $130 in a note to clients on Dec. 5, 2021.
"With the popularity and consumer demand for EVs on the trucking/SUV market, we believe Rivian is in the catbird's seat to take considerable market share in this EV arms race under its visionary CEO and founder RJ Scaringe," Ives' note said.
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Emmanuel Rosner of Deutsche Bank also set a $130 price target, but Morgan Stanley's Adam Jonas was even more bullish, setting an outperform rating and $147 price target.
"Rivian's compelling product, strong management, and deterministic access to capital are underpinned by a strategic relationship with AMZN to decarbonize the final mile. We see it as ‘the one' that can challenge Tesla," Jonas wrote in a note.
Rivian's network is still being built and could be a factor in Amazon seeking to diversify its fleet.
An Amazon spokesperson told CNBC on Wednesday that buying from multiple vehicle providers has been part of Amazon's sustainability plan.
"We always knew that our ambitious sustainability goals in our last-mile operations would require multiple electric delivery van providers," the spokesperson said in a statement. "We continue to be excited about our relationship with Rivian, and this doesn't change anything about our investment, collaboration, or order size and timing."
Competitors to Rivian have been gaining headway, particularly BrightDrop. The General Motors' GM subsidiary announced Wednesday that FedEx Express would buy an additional 2,000 electric vans on top of an order for 500, and Walmart would acquire 5,000 vehicles, representing a mix of EV600 and the smaller EV410.
For FedEx FDX, confidence in BrightDrop comes from its backing and available footprint.
"We were very excited about GM getting into this space in terms of its [vehicle history] … but also its footprint," Richard Smith, regional president of the Americas and executive vice president, said of the commitment to BrightDrop. "With the footprint they have, we feel very comfortable with their ability to provide us with a vehicle should one go down or to service a vehicle quickly."
BrightDrop has also announced orders of 18,500 BrightDrop vans from Merchants Fleet and an unnamed number of its EV410 vans from Verizon.
Rivian recently announced a factory outside Atlanta, but it has yet to announce a vast dealership network that could rival GM's or Stellantis'.
Click for more articles by Brian Straight.
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