As the dust settles from its disappointing descent, Rivian (RIVN), the American electric vehicle (EV) maker, will officially lose its spot on the Nasdaq-100 index. This is a significant consequence of its stock price falling over 90% from its all-time high, a peak it attained shortly after going public. A closer examination of Rivian’s journey to this point reveals a tale of early triumphs, escalating challenges, and the pursuit of future victories.
The End of the Nasdaq-100 Journey
Less than two weeks after JP Morgan analyst Min Moon forecasted Rivian’s departure from the Nasdaq-100, the prediction has come to fruition. Moon clarified that the Nasdaq-100, a stock market index comprising the 100 largest nonfinancial companies listed on the exchange, typically ousts the smallest member if the company’s weight falls below 0.1% for two consecutive months.
Falling beneath the critical 0.1% threshold on April 28 and May 31, Rivian’s ejection seemed imminent. Nasdaq confirmed this on Tuesday, announcing that the company would be replaced by On Semiconductor Corp. (ON), as Moon had correctly anticipated.
Notably, the EV company is also exiting the Nasdaq-100 ESG index, the Nasdaq-100 Equal-Weighted index, and the Nasdaq-100 Ex-Tech sector index, with the transition slated for June 20, 2023.
However, this loss doesn’t spell the end for Rivian. Despite Tuesday’s developments, its stock saw a nearly 9% surge, as several other EV stocks also ascended.
Rivian’s Roller Coaster Ride: From IPO Highs to Executive Turnover
Rivian’s initial public offering (IPO) in 2021 started on a high note. The share price soared from an IPO price of $78 to over $100 per share on the first trading day. The early success pushed the startup’s valuation to $86 billion, briefly making it one of the world’s most valuable carmakers – a remarkable feat considering the company had yet to generate any revenue.
However, maintaining this inflated share price proved challenging. Amidst tough competition and production struggles, Rivian has seen significant turnover in its executive ranks. One notable departure was COO Rod Copes during a critical production ramp-up phase. The startup was also compelled to lay off over 800 employees earlier this year to expedite its path to profitability.
These developments, coupled with a dramatic decrease in stock price since the IPO, have led to considerable investor unrest. This was exacerbated when Rivian raised its vehicle prices, prompting multiple class-action lawsuits accusing the startup of inflating share prices and misleading investors. Manufacturing hitches have been another key roadblock for the company.
Rivian’s Road Ahead: Opportunities Amidst Challenges
Rivian’s removal from the Nasdaq-100 index means all shares held by the index will be sold and replaced with the new company (On Semiconductor). However, despite being down over 90% from its all-time high, its stock has climbed nearly 20% over the past month.
Furthermore, Rivian’s CEO, RJ Scaringe, is concentrating on driving profitability as much as ramping up production. The company’s second-generation EV models (R2), expected in 2026, are projected to significantly improve margins through simplified manufacturing processes and components.