The electric vehicle maker has massive upside potential, but how have shares performed recently?
There’s no doubt about it: Rivian (RIVN 1.92%) stock has massive long-term upside potential. Its current market cap is just $13 billion — $800 billion less than its biggest competitor in the electric vehicle (EV) space, Tesla. With new mass-market models on the way, we could see Rivian’s valuation soar over the coming years. But how have the shares performed since the company went public roughly three years ago?
High hopes for an upstart EV maker
Rivian held its initial public offering (IPO) on Nov. 9, 2021, with a price of $78 per share, and closed that first trading day at just over $100. If you had invested $150 into the company when shares first debuted, though, your stake would be worth just $17 today. That’s not a typo. In three years, your $150 stake would have shrunk to only $17.
TSLA Total Return Level data by YCharts.
The problem hasn’t been revenue growth. Over that time frame, the EV maker’s top line has gone from $55 million in 2021 to more than $5 billion over the past year. The issue isn’t its future growth outlook, either. Rivian’s new mass-market models, which are expected to hit the roads starting in 2026, could help expand the company’s sales base by an order of magnitude or more. That’s what happened when Tesla started shipping its mass-market models, the Model 3 and Model Y.
What then has been the problem with Rivian stock? In part, its poor performance relates to the fact that the company operates in a capital-intensive and highly competitive industry. But the larger issue was a simple overpricing of the stock. Shortly after it went public, Rivian’s market cap peaked at $153 billion — almost 3,000 times its 2021 revenue.
Expectations have come down sharply since then, and even Tesla shares have suffered due to a slowdown in EV sales growth. But if you’re looking to buy into a former growth darling at a historically deep discount, this could be your chance.
Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
