Rivian (RIVN) investors may want to mark June 20, 2023 on their calendars as the automaker will be removed from the Nasdaq-100 Index on that date. NASDAQ confirmed the removal on Tuesday morning, a little over a week after a JP Morgan Chase forecasted it would take place.
Earlier this month analyst Min Moon said the automaker’s stock sell off, which has caused the stock to lose over 90% of its value since its peak, has diminished Rivian’s weighting in the index and caused it to fall below 0.1 percent for two consecutive months. Since that doesn’t meet the requirements to be included in the index, Moon said they are likely to be removed with ON Semiconductor being the top candidate to take Rivian’s spot.
On Tuesday NASDAQ confirmed both of Moon’s predictions, saying Rivian would be removed from the index before markets open on June 20, 2023, and that ON Semiconductor will be taking its place.
Rivian’s removal from the Nasdaq-100 is not limited to that index alone however. Numerous other indices, such as the Nasdaq-100 Equal Weighted Index, Nasdaq-100 ESG Index, and Nasdaq-100 Ex-Tech Sector Index, also adjust their portfolio weights based on the Nasdaq-100. Consequently, these indices will also be obliged to remove RIVN from their holdings. The process of removing a company from an index requires the sale of all shares held within that index, which could potentially have an negative impact on RIVN stock if there is not enough demand from buyers to absorb those shares, as noted by Investor Place.
After its initial public offering (IPO) in November 2021, Rivian experienced a surge in share prices, reaching a high of over $170. However, the company has faced several challenges since then, including scaling up production amidst a global pandemic and disruptions in the supply chain. As a result, Rivian’s stock has declined more than 90% in value since that high.
Despite this, Rivian seems to be in the best position to succeed compared to other electric vehicle (EV) manufacturers that have emerged in recent years. According to Rivian’s latest update, they remain on track to build 50,000 vehicles this year, an amount that would double their output from 2022. They also have a reserve of nearly $12 billion in cash or cash equivalents as of the end of Q1 2023, providing them with more than enough fund to keep operating for the foreseeable future.
Disclaimer: Darryn holds no shared in RIVN.