Sunday, August 7, 2022

Electric Vehicle Newcomers Overtake Industry Giants In Stock Market Rally

Investor interest in a pair of emerging EV makers – Rivian and Lucid – pushed both companies’ market caps higher than industrial giants Ford, GM and, in Rivian’s case, Volkswagen.

Electric vehicle stocks rallied amid strong investor interest, with new carmaker Lucid up 24% on Tuesday, while new public rival Rivian Automotive jumped 15%, while industry leader Tesla gained 4.1%. Lucid, Rivian, and Tesla were among the top-selling assets on the Fidelity retail trading platform all day Tuesday.

A five-day rally in Rivian Automotive’s stock has seen the electric truck startup more than double since debuting last week, with a market capitalization that now exceeds Volkswagen.

The stock jumped 14% to $ 169.70 in New York on Tuesday, up 118% from its original public offering price of $ 78. As a result, the company has a market valuation of about $ 150 billion, making Rivian the largest US company with zero income.

Rivian, backed by Amazon and Ford, has surpassed Volkswagen’s market cap of $ 139 billion as investors flooded with cash and eager to get into the electric vehicle sector can now invest in stocks other than industry pioneer Tesla.

“This is another sign that foam is returning to the market,” said Matthew Mayley, chief market strategist for Miller Tabak. “Long after the emergency has passed, the emergency liquidity level is still entering the system.”

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Volkswagen is the largest automaker in Europe, supplying about 10 million vehicles per year, making it the world’s second largest car manufacturer after Toyota. Volkswagen generates about $ 300 billion in revenue annually. The German industrial giant’s stable of brands include luxury car manufacturers Porsche, Audi and Lamborghini, as well as Scania heavy trucks and Ducati motorcycles.

Meanwhile, Rivian, which is developing the R1T electric pickup truck and the R1S electric SUV, began shipping some trucks in September, mostly to its employees. He estimates that by the end of 2023, annual production at his main plant will reach 150,000 vehicles.

The post-IPO rally also makes Rivian’s debut week its best of the year, just ahead of Affirm Holdings, which gained 117% in its first five sessions. This data does not include IPOs that raised less than $ 1 billion.

Electric vehicle stocks have sparked increased interest from retail investors in recent weeks, with Rivian, Lucid and Tesla topping the Fidelity retail platform’s list of best-selling assets on Tuesday. However, the recent Tesla stock selloff could also be a boon for Rivian.

“The Rivian has become the most popular EV of the month as investors have no idea if Elon Musk has finished selling Tesla shares,” said Ed Moya, senior market analyst at Oanda. Tesla shares fell 15% after Elon Musk conducted a Twitter poll earlier this month in which he asked voters if he should sell 10% of his stake in the company, followed by a series of share sales.

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“Wall Street believes Rivian has much more upside potential than Tesla,” Moya added, referring to the potential gains on both stocks. Tesla, a more mature company than Rivian, is currently trading at a price-to-earnings ratio of 334, while the NYSE FANG +, of which it is a part, trades about 43 times its earnings. For the broader S&P 500, that number is 26.

At one point during Tuesday’s trading, Rivian was worth over 90% of S&P 500 companies, including stocks such as Goldman Sachs, Boeing, Citigroup, Starbucks, and Caterpillar.

Lucid added more than $ 17 billion to Tuesday’s valuation of the electric vehicle startup, pushing its market capitalization higher than Ford and General Motors.

The company was valued at over $ 91 billion. It eclipsed Ford’s $ 79 billion market cap and surpassed GM, which is just under $ 91 billion. The stock rally came after Lucid said on Monday that it remains confident in its ability to produce 20,000 vehicles in 2022.

Nation World News Desk
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