Rivian has delivered only a handful of its electric trucks.
Courtesy Rivian
Rivian Automotive stock is giving back some of its epic early gains following the company’s successful IPO. Investors can expect shares to stay volatile for a while, especially because no one know what Wall Street analysts thinks about the company.
No one on Wall Street covers the stock yet, according to Bloomberg. It could move still more as analysts weigh in with their views.
Early Thursday, Rivian (ticker: RIVN) stock was down about 13%, while the S&P 500 had fallen by 0.2%. The Dow Jones Industrial Average had shed about 0.6%.
Thursday’s slide follows a 15% drop on Wednesday, but Rivian stock rose 121% the first five trading days following its initial public offering. At about $128 a share, Rivian stock is up about 64% from its $78 IPO price.
It is no surprise that no one on Wall Street is covering the stock. Coverage usually comes about a month after an IPO wraps up. Brokers participating in an offering are typically prohibited from publishing research for about 25 days following the deal.
Weekends can affect the exact timing of the start of coverage. Pinterest (PINS), for instance, sold shares in an IPO on April 17, 2019. Most of the analysts launched coverage on May 17, 30 days later. ZoomInfo Technologies (ZI) sold shares on June 3, 2020. Coverage came on June 29.
Brokers who aren’t part of the IPO can, of course, do whatever they like regarding coverage. But Rivian’s IPO was big. Brokers that played a role include Morgan Stanley, Goldman Sachs, J.P. Morgan, Barclays, Deutsche Bank, Wells Fargo, Piper Sandler, RBC, Baird, Wedbush, Loop Capital, and many others.
That means not a lot of coverage will be arriving early. Analysis from large brokers should arrive around Dec. 6.
Whether analysts launch with Buy, Hold or Sell ratings will have a lot to do with where the stock goes between now and then. It’s tough to estimate exactly how ratings will turn out.
Rivian is, after all, highly valued. At $128 a share, Rivian’s market capitalization is about $128 billion, based on roughly 1 billion fully diluted shares outstanding. That is more than either Ford Motor (F) and General Motors (GM), even though Rivian has delivered just a handful of its electric trucks. Investors are optimistic about the future of EVs and Rivian’s place in the EV industry.
Other EV ratings offer clues about the stand analysts will take. Tesla (TSLA) is, of course, the world’s most valuable EV and automotive company. It has 21 Buy ratings out of 45 analysts. Lucid (LCID), an EV start-up somewhat similar to Rivian, has two Buy ratings and one Sell rating.
Lucid, however, wasn’t a traditional IPO. That company merged with a SPAC to raise money and become publicly traded. The timing of coverage for SPAC-related companies is another story.
Analysts don’t typically cover SPACs and don’t launch coverage of a company merging with a SPAC until the transaction closes.
Lucid closed its merger in July. It picked up its first rating, a Buy from Citigroup , in September, about 47 days after the merger was completed. It took almost 200 days, from the time the SPAC merger was announced in February, for Lucid to get its first rating.
Write to Al Root at [email protected]
