Rivian, the electric vehicle startup that went public in 2021, is facing the risk of being kicked out of the Nasdaq 100 index, according to a report by JPMorgan Chase. The Nasdaq 100 is a stock market index that tracks the performance of the 100 largest non-financial companies listed on the Nasdaq exchange. Rivian was added to the index in December 2021, after its initial public offering (IPO) raised $11.9 billion and valued the company at $86.7 billion.
However, since then, Rivian’s stock price has plummeted by more than 90%, eroding its market capitalization to less than $8 billion as of June 14, 2023. The company has faced several challenges, such as production delays, quality issues, regulatory hurdles, and competition from other EV makers like Tesla and Lucid. Rivian has also failed to deliver on its promise of launching its first electric pickup truck, the R1T, and its electric SUV, the R1S, by the end of 2022.
As a result, Rivian’s weight in the Nasdaq 100 index has fallen below the minimum threshold of 0.1%, making it eligible for removal from the index. The Nasdaq 100 index is rebalanced quarterly, and the next rebalancing is expected to take place on June 21, 2023. JPMorgan analysts predict that Rivian will be replaced by NXP Semiconductors, a Dutch chip maker that supplies components to the auto industry. NXP Semiconductors has a market capitalization of about $70 billion and a weight of 0.2% in the index.
If Rivian is ousted from the Nasdaq 100 index, it could have some negative implications for the company and its shareholders. For one thing, it could reduce the visibility and liquidity of Rivian’s stock, as some institutional investors and exchange-traded funds (ETFs) that track the index may sell their shares or avoid buying them. For another thing, it could damage Rivian’s reputation and credibility as a leading EV maker, especially since its rival Lucid Group is still part of the index.
However, some analysts and investors remain optimistic about Rivian’s long-term prospects, despite its short-term troubles. They believe that Rivian has a unique value proposition in the EV market, with its focus on adventure vehicles and sustainability. They also expect that Rivian will eventually overcome its production challenges and deliver its vehicles to customers, generating revenue and profits. They argue that Rivian’s stock price reflects excessive pessimism and undervalues the company’s potential growth opportunities .
