Shares of electric vehicle maker Rivian retreated Wednesday, putting brakes on a euphoric rally that has seen it surpass legacy automakers such as General Motors in market capitalization despite questions about its business model.
Rivian dropped, 14 percent, for the first time since its blockbuster market debut last week made the company the second-most valuable US automaker.
Analysts said Rivian’s stunning show in its initial public offering lifted demand for other EV stocks. They added that a pullback in Tesla’s stock after chief Elon Musk offloaded his stake worth billions of dollars also spurred appetite for others in the sector, such as luxury electric car maker Lucid, whose market value eclipsed that of Ford on Tuesday after the company said it is confident of producing 20,000 of its upcoming Lucid Air sedans in 2022.
On Wednesday, Lucid also saw a decline, as the most heavily traded US stock was down almost 7 percent in mid-afternoon trading.
Conversely, Tesla shares made gains, up 3 percent mid-afternoon, rising for a second day, as investors appeared to take in stride news of Musk selling another $973 million in stock to pay taxes after exercising options.
Electric pickup truck maker Canoo surged 10.9 percent to hit over a five-month high after the company said it would start U.S. production in the final quarter of 2022, sooner than previously announced 2023.
Lucid, Tesla and Rivian were among the top-most discussed stocks on investor-focused website stocktwits.com, signaling interest from small-time investors.
“What you’re seeing is these unbelievable valuations when you don’t have any profitability,” said Stephanie Lang, chief investment officer at wealth management firm Homrich Berg.
“You have to be careful here because oftentimes when valuations really are stretched and have no basis, that’s going to end badly.”