Why Rivian Stock Rises in 2023, but Nio and Nikola Fall

While electric vehicle (EV) sales increased significantly in 2023 compared to 2022, investor sentiment toward individual EV companies varied significantly. slightly ahead of S&P 50024% increase, Rivian (RIVN -3.88%) First of all, the stock price plunged 82% in 2022 and then rebounded last year. Nio (no -3.11%) and Nicola (NKLA -4.85%)However, it did not enjoy the same success, extending the 69% and 78% declines experienced in 2022 respectively.

Rivian shares are up 27% in 2023, while Nio is down 7% and Nikola is down 60%, according to data provided by S&P Global Market Intelligence.

Investors chose Rivian but allowed Nio and Nikola to pass right by them.

Rivian continued the decline it experienced in 2022 until the first half of 2023, but its stock price turned a corner over the summer. In early July, Rivian announced that it would produce 13,992 vehicles in the second quarter of 2023, a 50% increase over the quarter.

The company also reaffirmed its forecast to produce 50,000 vehicles in 2023. A few months later, in November, Rivian heightened investor excitement by reporting third-quarter 2023 financial results. Rivian reported $1.34 billion in revenue and an adjusted loss of $1.19 per share, beating analysts’ estimates of $1.31 billion in revenue and a loss of $1.33 per share.

Like Rivian, Nio’s stock price heated up over the summer when the company announced plans to expand its operations in the Netherlands and analysts revealed optimistic price targets. However, unlike Rivian, Nio’s stock price subsequently plummeted and failed to recover.

The company disappointed investors in August with its second quarter 2023 financial results. In addition to a year-over-year decline in vehicle deliveries, Nio also reported a decline in revenue compared to the same period in the first quarter of 2022. Investors hit the brakes again in September when the company announced at least its issuance plans. That’s a billion dollars in debt to help keep the lights on.

From the beginning of the year through August, Nikola investors had high expectations for this hydrogen stock, with its stock price soaring more than 57%. But the stock’s rally ran out of gas and began a sharp decline that lasted the rest of the year.

The stock price decline began on August 4, when Nikola reported poor second quarter 2023 financial results and announced that the company would appoint a new CEO. The dog days of summer led to even bigger losses in the stock shortly after the company announced plans to issue $325 million in debt. To give the bear more power, Nikola announced a recall for its battery-powered vehicles.

Nikola’s rocky road in August continued into November, when the company posted poor results for the third quarter of 2023. Nikola, missing analysts’ expectations that it would report a loss of $0.15 per share, reported an adjusted loss of $0.30 per share. He also revealed that the previously announced recall will cost the company approximately $62 million. A few weeks later, Nikola reported that it was re-entering the debt markets. This time he planned to issue $200 million worth of convertible bonds.

With 2023 in the rearview mirror, is it a good time to transition some of these EV stocks into your portfolio?

After Rivian’s impressive performance in 2023, EV-minded investors may be wondering if it’s too late to pick the stock for themselves. Since the company is still unprofitable, traditional valuation metrics are not helpful. Nonetheless, the stock’s rise in 2023 shouldn’t deter investors from digging deeper into the company. That’s because there are plenty of reasons to believe that stock prices can continue to rise.

By switching lanes and turning their attention to Nio, investors should recognize that the company’s poor performance through 2023 and early 2024 could present an opportunity to secure an attractive growth stock at a lower price point. Of course, there remain potential holes in Nio stock, but those with a high tolerance for risk may want to consider putting Nio stock in their portfolio.

On the other hand, Nikola stock, which has entered penny stock territory, has too many red flags around it to be considered a buy. The potential of hydrogen-powered vehicles could rev up the engines of some investors, but Nikola has continued to flounder recently, and there’s no confidence the company can turn things around in the near future.