Goldman Should Be Ashamed For A “Pump And Dump” On The Rivian IPO

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In his podcast addressing the markets today, Louis Navellier offered the following commentary.

Manufacturing Sputters

ISM reported on Friday that its non-manufacturing, service index slipped a bit to 55.1 in February, down slightly from 55.2 in January. Since any reading above 50 signals an expansion, the February reading was still very healthy. The ISM service index has now expanded for 32 of the past 33 months. Fully 13 of the 17 industries surveyed reported an expansion.

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The new orders component expanded for the second month in a row to 62.6 in February, up from 60.4 in January, which was very encouraging. Also encouraging is that service PMIs are now largely above 50 in Europe, so a broad-based economic recovery is apparently underway, despite the fact that some manufacturing surveys are still contracting.

On Wednesday, ISM announced that its manufacturing index rose to 47.7 in February, up from 47.4 in January. Since any reading below 50 signals a contraction, the U.S. manufacturing sector is still in a recession for the fourth straight month.

The new orders component rose to 47 in February (up from 42.5 in January), while the production component decline to 47.2 (down from 48 in January). Order backlogs rose to 45.1 in February (up from 43.4 in January), but since these major components remain below 50, the manufacturing sector is still sputtering and in a contraction.

Musk Spooks

Elon Musk hosted Tesla Inc (NASDAQ:TSLA) Investor Day on Wednesday and laid out a mission statement called “Master Plan Part 3” to become the largest car manufacturer in the world with an output of 20 million vehicles annually by 2030, up from 1.3 million currently.

Tesla would have to spend up to $175 billion to achieve its 2030 production goal and that spooked some investors. No matter how ambitious Musk is for Tesla long term, the media and investors seemed to be more interested in when the Cybertruck will be launched, since prototypes are being spotted around Tesla’s Palo Alto headquarters.

Furthermore, the announcement of a new manufacturing plant in Monterrey, Mexico to build a more affordable Tesla was lacking in detail of what Tesla’s new affordable vehicle might be. The truth of the matter is outside of the Cybertruck, Tesla’s model lineup is getting stale and investors are craving for exciting new models.

Electric vehicles (EVs) are fighting high lithium, nickel and cobalt prices and Tesla needs to seriously address this acute shortage since even though Tesla is investing in lithium mining, the high prices of batteries is constraining EV sales globally.

Speaking of EVs, Ford will resume production of its F-150 Lightning on March 13th. The culprit behind the production shutdown is apparently attributable to SK On, which is building lithium-ion battery packs for Ford.

Specifically, a Ford spokesman said that it will “apply all our learnings and work with SK On’s team to ensure we continue delivering high-quality battery packs … down to the battery cells.”

In the meantime, the F-150 Lightning vehicles that have recently been made remain in limbo, pending updates to “parts and engineering processes.” What stopped the F-150 Lightning production was one vehicle awaiting a pre-delivery inspection in a holding lot caught on fire while charging.

Ford and VW Group are pushing fast AC/DC charging and their battery packs typically weigh more due to extra cooling to dissipate the heat that fast charging can generate. So whether there was ultimately a problem with the electronics or the cooling associated with the SK On battery packs for the F-150 Lightning remains elusive.


Shame on Goldman

Finally, Rivian Automotive Inc (NASDAQ:RIVN) was an ESG darling when it went public since it was briefly worth more than Ford, which has a significant stake in Rivian when it has its IPO. Rivian announced on Tuesday that it lost $1.72 billion in the fourth quarter, down from a $2.42 billion loss in the same quarter a year ago.

The company depleted $2.2 billion in cash in the fourth quarter and had $11.6 billion in cash at the end of the fourth quarter. At this “burn rate,” Rivian may be on the verge of bankruptcy later this year.

The biggest problem that Rivian has is that one of its former investors, namely Ford, is selling its F-150 Lighting significantly cheaper than Rivian’s R1T pickup. Furthermore, the Tesla Cybertruck is coming and will also be cheaper than Rivian’s R1T pickup, so frankly, I do not foresee any scenario that Rivian can possibly survive.

As a result, Rivian is another ESG disaster, and its IPO underwriters, namely Goldman Sachs, J.P. Morgan and Morgan Stanley, should be ashamed of themselves for doing a “pump and dump” on the Rivian IPO to naïve ESG investors.

Coffee Beans

By a massive margin, the largest share of revenue in the global market for smartphone apps is generated with games. For 2022, games are estimated to have accounted for around 62 percent of app revenues. Total revenue in the worldwide app market is calculated to have been around $431 billion in 2022. Source: Statista. See the full story here.