A lot of folks believe electric-vehicle (“EV”) stocks are the “golden goose”…
The world is adding more and more EVs every day. And as this long-term trend plays out, these people think every stock in the industry will grow into a big winner for investors.
But as I noted in mid-December… that’s far from the case.
Now, I’m not saying that all EV-related stocks will be losers. Like everything else in life, winners will emerge. And over the long run, folks could make a lot of money in this space.
But that doesn’t mean every EV-related stock will be a golden goose. And as I warned this past December, even adding one of these stocks to a major index didn’t help it.
The investment committee for the Nasdaq 100 Index learned this lesson the hard way…
On December 19, this group of decision-makers added the stock I warned folks about to its tech-heavy index. Since then, it’s down roughly 42%. And it just keeps getting worse…
The stock I warned PowerFeed readers about was Rivian Automotive (RIVN).
When Rivian went public in November 2021, the market valued it at more than $100 billion. That value was more than legacy carmakers Ford Motor (F) and General Motors (GM) combined. And it was the sixth-largest initial public offering (“IPO”) in U.S. history.
But the trouble started almost immediately…
Folks began turning away from tech stocks in late 2021. By early 2022, Rivian dipped below its IPO price. And by the time of my December 2022 warning, it had plunged about 75%.
Some folks believed Rivian’s slide would end there…
You see, the stock joined the Nasdaq 100 on December 19.
Getting added to an elite index like that is typically a big deal. But in this case, it was just a “virtue signaling” move. And the Power Gauge helped me see why it wouldn’t matter…
The EV maker’s Power Gauge rating had been “bearish” for months. Its relative strength indicator was deep in the red zone. And on top of that, its fundamentals were abysmal.
Since then, the pain has only gotten worse for Rivian’s investors…
The company released its latest earnings report in February. It covered the fourth-quarter and full-year results for 2022. And to put it bluntly… it was another terrible report.
Rivian’s net loss for the fourth quarter came in at roughly $1.7 billion. That brought its total net loss for the year to around $6.8 billion.
The company also forecast production of 50,000 vehicles in 2023. But that seems like nothing more than a pipe dream…
That level of production would more than double Rivian’s 2022 output.
It only produced 24,337 EVs last year. And it only delivered 20,332 of them. Plus, as you’ll remember from my December warning, it also recalled more than 13,000 EVs in October.
When a company burns through $6.8 billion in a year in an inflationary environment, the going gets tough. So it makes sense that Rivian’s stock has continued its freefall…
It’s down around 32% since the February earnings report. It’s down about 42% since the Nasdaq 100’s addition last December. And it’s roughly 92% below its November 2021 peak.
The bottom line is simple…
If Rivian can turn around its business, it might prove to be a good bet on the long-term shift toward EVs. But for now, the stock is far from the golden goose that many investors want.
The Nasdaq 100 committee ignored that fact in December. But the Power Gauge didn’t.
And the same lesson holds true for us today. Avoid Rivian until further notice.
Good investing,
Pete Carmasino
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