If you had invested $150 in Rivian stock 3 years ago, this is how much you would have today

There is no doubt: Rivian (RIVN 1.92%) the stock has massive long-term growth potential. Its current market cap is just $13 billion — $800 billion less than its biggest competitor in the electric vehicle (EV) space. adze. With new mass-market models on the way, we could see Rivian’s valuation rise in the coming years. But how have the shares fared since the company went public about three years ago?

High hopes for an upstart EV maker

Rivian conducted its initial public offering (IPO) on November 9, 2021 at a price of $78 per share, and ended the first day of trading at just over $100. However, if you had invested $150 in the company at the stock’s debut, your stake would be worth just $17 today. This is not a typo. In three years, your $150 stake would have shrunk to just $17.

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The problem was not revenue growth. In that time frame, the electric vehicle maker’s top line has gone from $55 million in 2021 to more than $5 billion in the past year. Nor is the problem its future growth prospects. Rivian’s new mass-market models, expected to hit the roads starting in 2026, could help expand the company’s sales base by an order of magnitude or more. That’s what happened when Tesla started shipping its mass-market models, the Model 3 and Model Y.

So what was the problem with Rivian shares? In part, its poor performance is due to the fact that the company operates in a capital-intensive and highly competitive industry. But the bigger problem was a simple overpricing of the stock. Shortly after going public, Rivian’s market capitalization peaked at $153 billion — nearly 3,000 times its 2021 earnings.

Since then, expectations have plummeted, and even Tesla’s stock has suffered as electric vehicle sales growth slows. But if you’re looking to buy a former darling on the rise at a historically significant discount, this could be your chance.