The most inexplicable story yesterday: the Biden administration talking about re-filling the SPR. It made no sense.
I talked about it yesterday, here.
The writing on the wall: "energy transition" is dead (don't take that out of context).
The canary in the coal mine? Rivian.
Link here.
Rivian literally destroyed the first quarter for two huge iconic US companies: Ford and Amazon.
Amazon will adjust and it will turn out to be nothing more than a speedbump.
For Ford, I'm not sure.
From the linked article:
Rivian Automotive Inc. recently set new 52-week lows amid an escalating sell-off in the electric-vehicle sector, which was fueled by rising supply-chain risks.
Despite the fact that 1Q22 production and delivery numbers were pointing in the right direction, the market currently has no appetite for high-multiple stocks.
Given the increased supply-chain risks, I wouldn't be surprised if Rivian Automotive reduced its production forecast for 2022 once more.
Rivian Automotive entered the stock market at a time when demand for electric-vehicle stocks was high and investors were willing to pay almost any price for the promise of increased market share and sales.
However, since Rivian Automotive's IPO at the end of 2021, the stock has consistently underperformed.
Rivian Automotive's decline has accelerated since the company announced in February that it is reducing its production forecast for 2022 by 50% due to growing part sourcing issues.
Inflation is also affecting Rivian Automotive's pricing structure, and the company announced price increases of up to 20% for the R1T pickup truck and the R1S SUV in March, much to the angst of reservation holders.
Rivian Automotive's management quickly backpedaled after customers complained about the price increases, but the damage had already been done. According to the new production forecast, Rivian Automotive expects to produce only 25K electric-vehicles this year, down from an initial forecast of 50K that Rivian Automotive provided as a realistic production goal at the end of 2021.
However, growing supply-chain issues are causing problems for Rivian Automotive and its leadership, and those issues could get a lot worse before they get better in the short term.
According to new delivery data made public by Chinese EV companies, the reemergence of Covid-19 had a significant negative impact on deliveries in April. For example, NIO delivered only 5,074 electric-vehicles in April, compared to 9,985 in March, a troubling 49% decrease. Other EV companies' deliveries have also been halted. The drop in delivery follows a significant drop in China's auto market: auto sales fell 11.7% in March.
Not mentioned in the article:
- NKLA: valued at $2.7 billion and has delivered eleven vehicles.
By the way, a lot of great companies over the years have seen their stock drop to 52-week highs. But in this case, Rivian has joined a very exclusive club that is growing less exclusive every day.
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