S&P 500 Retreats As Meta Nosedives 24%

Key Insights

  • S&P 500 declined as Meta’s disappointing results put pressure on the whole tech segment. 
  • Treasury yields continued to move lower but did not provide support to the market. 
  • A move below the support at 3760 will open the way to the test of the next support level at 3735.

The Tech Segment Remains Weak

S&P 500 declined towards the support at 3805 as tech stocks continued to move lower. Yesterday, Meta released a disappointing earnings report, which put additional pressure on market sentiment in the tech segment. The tech-heavy Nasdaq declined by 1.6% in today’s trading session.

Treasury yields continued to move lower, and the yield of 10-year Treasuries settled below the important 4.00% level. However, lower Treasury yields did not provide enough support to S&P 500 as traders focused on the sell-off in tech stocks.

Traders should note that leading tech stocks like Meta were the main driver behind the strong performance of the S&P 500 in recent years. The current sell-off in this market segment is an uncomfortable signal for S&P 500 bulls. The market has become concentrated, so S&P 500 will not be able to develop sustainable upside momentum if mega cap stocks remain under pressure.

Caterpillar was a notable gainer today as the stock rallied 8% after easily beating analyst estimates on both earnings and revenue.

It looks that S&P 500 will find itself under more pressure tomorrow as Amazon stock is down by 19% in the post-market session after the release of its third-quarter report. Amazon reported revenue of $127.1 billion and GAAP earnings of $0.28 per share,

The company’s GAAP earnings beat analyst estimates but included a pre-tax valuation gain of $1.1 billion from the common stock investment in Rivian. The company expects to report fourth-quarter revenue of $140 billion – $148 billion, a growth of 2-8% compared to the fourth-quarter of 2021.

In the fourth quarter, Amazon expects to report operating income of $0 – $4.0 billion. The weak guidance is the main driver behind the strong sell-off in the post-market session.

Traders should note that Apple will also release its results today, and they may have a material impact on the dynamics of S&P 500.

S&P 500 Settled Below The Support At 3805 In The Post-Market Session

S&P 500

S&P 500 gained strong downside momentum after the release of Amazon’s results and moved towards the support level at 3760. If S&P 500 declines below this level, it will head towards the next support at 3735. A move below the support at 3735 will open the way to the test of the support at 3700.

On the upside, the previous support level at 3805 will serve as the first resistance level for S&P 500. If S&P 500 gets back above this level, it will head towards the resistance at 3835. A successful test of the resistance at 3835 will push S&P 500 towards the resistance at 3885.

For a look at all of today’s economic events, check out our economic calendar.

Rivian Is Down By 15%, Here Is Why

Key Insights

  • CNBC reported that Ford decided to sell 8 million Rivian shares. 
  • The report also indicated that another investor was willing to sell 13 million – 15 million shares. 
  • Rivian’s market capitalization exceeds $20 billion despite the huge pullback from all-time highs. 

Rivian Stock Falls As Ford Is Selling 8 Million Shares

Shares of Rivian gained strong downside momentum after a CNBC report indicated that Ford  would sell 8 million Rivian shares. The shares would be sold through Goldman Sachs. In addition, the report indicated that an unknown seller would be selling 13 million – 15 million Rivian shares through JPMorgan.

Ford owns 102 million shares of Rivian, so the automaker decided to sell about 8% of its current stake in the EV company. Rivian stock had a great debut in late 2021 and touched highs near the $180 level but lost momentum and has been declining for months.

Not surprisingly, traders rushed to sell Rivian stock after the CNBC report was released. The general bearish market sentiment added to pressure, and the stock moved below the $25 level.

What’s Next For Rivian Stock?

The current market environment is bearish for stocks like Rivian. The company is not expected to become profitable anytime soon, while the market is focused on finding safe-haven plays in the rising interest rate environment. In addition, analyst estimates for Rivian have been declining in recent months.

Ford’s decision will certainly serve as a major red flag for many investors, and the stock could remain under strong pressure in the upcoming trading sessions. The CNBC report indicated that Ford was not the only company that was willing to sell shares, which will increase traders’ concerns.

It should be noted that Rivian is valued at more than $22 billion even after the huge pullback. The company has not reached mass production levels, and it remains to be seen whether the market is willing to support such enterprises in the current environment. While the pullback from $180 to $25 may look like a great opportunity to buy Rivian stock, traders must stay cautious as Rivian remains a richly valued company.

For a look at all of today’s economic events, check out our economic calendar.

Best Automotive Stocks To Buy Now

Key Insights

  • Automotive stocks haven been under pressure since the start of this year. 
  • Shares of legacy automakers have declined to attractive levels. 
  • Current problems may have been already priced in by the market. 

Automotive stocks have been moving lower in recent months. Legacy automakers, speculative EV stocks like NIO and Rivian, and even Tesla found themselves under pressure due to worries about supply chain problems and the negative impact of rising commodity prices. This pullback has pushed the stocks of legacy automakers to attractive levels.

General Motors

General Motors has recently released its first-quarter report. The company reported revenue of $35.98 billion and adjusted earnings of $2.09 per share, missing analyst estimates on revenue and beating them on earnings.

The report did not provide much support to the stock, which continued to trade near yearly lows due to general market sentiment.

Analysts expect that General Motors will report earnings of $6.89 per share in the current year and earnings of $6.88 per share in the next year, so the stock is trading at less than 6 forward P/E.

While analysts do not expect that General Motors will be able to grow its profits in the near term, current valuation levels look attractive.

Ford

Ford has also released its quarterly results this week. The market’s reaction was negative, and the stock slipped to yearly lows.

Ford is also valued at less than 6 forward P/E, so the market is somewhat skeptical about the near-term financial performance of legacy automakers.

However, there is room for multiple expansion, as higher interest rates will likely force investors to search for cheap companies with solid fundamentals.

Inflation and supply chain problems will remain the key bearish catalysts for Ford and other automotive stocks, but these problems may have been already priced in by the market.

For a look at all of today’s economic events, check out our economic calendar.

Ford Is Down By 5%, Here Is Why

Key Insights

  • Ford easily beat analyst estimates on both earnings and revenue. 
  • The decrease of the value of Ford’s share in Rivian led to a loss on a GAAP basis. 
  • After the pullback, Ford stock is trading at just 6 forward P/E. 

Ford Stock Falls Despite Strong Report

Shares of Ford  found themselves under pressure after the company released its first-quarter report. Ford reported revenue of $34.5 billion and adjusted earnings of $0.38 per share, beating analyst estimates on both earnings and revenue.

On a GAAP basis, the company recorded a net loss of $3.1 billion due to the mark-to-market loss of $5.4 billion on Ford’s stake in Rivian. Rivian stock has performed poorly after the initial hype, and it is currently trading at all-time lows.

For the full-year 2022, Ford maintained its outlook for $11.5 billion – $12.5 billion in adjusted EBIT. The company expects that semiconductor availability will improve in the second half of the year. At the same time, Ford notes that commodity costs would be up by about $4 billion year-over-year.

What’s Next For Ford Stock?

Analysts expect that Ford will report earnings of $1.93 per share in the current year and earnings of $2.23 per share in the next year, so the stock is trading at roughly 6 forward P/E. It should be noted that analyst estimates have been moving lower in recent weeks.

Ford stock lost momentum at the start of this year and is down by 45% from 2022 highs. Current valuation levels look attractive, so Ford stock may get support from speculative traders who are willing to bet that the recent sell-off is not justified.

The key risk for Ford shares is the potential slowdown of the world economy, which could reduce demand for the company’s products. The recent U.S. GDP Growth Rate report indicated that GDP declined by 1.4% in the first quarter, compared to analyst consensus which called for growth of 1.1%. In case the U.S. economy continues to slow down, Ford stock may find itself under more pressure.

For a look at all of today’s economic events, check out our economic calendar.

Rivian Shares Tumble As 2022 Production Outlook Disappoints

Shares of electric vehicles manufacturer Rivian fell over 8% on Friday after the company cut its production outlook in half as surging input costs and supply chain bottlenecks continue to bite.

Irvine, California-based EV start-up warned that supply-chain problems could halve its planned production this year to just 25,000 vehicles. Net loss for the fourth quarter was $2.46 billion, or $4.83 per share, compared with a loss of $353 million, or $3.50 per share, from the year-ago period, Reuters reported.

The company’s reported revenue of $54 million, fell far short of analysts’ expectations of $60 million. Cash and equivalents amounted to $18.4 billion in the last quarter.

At the time of writing, Rivian stock traded over 8.0% lower at $37.82 on Friday, way below their IPO price of $78. The stock fell more than 60% so far this year.

Analyst Comments

Rivian is a well-capitalized pure EV start-up OEM that can leverage its strategic relationship with Amazon to derive scale and build software and services competencies for its consumer business. We forecast Rivian to sell 1.5 million BEVs annually in 2030 (801k Consumer / 653k Commercial). We forecast Rivian’s total revenues to grow at a 34% CAGR from 2025 to 2030,” noted Adam Jonas, equity analyst at Morgan Stanley.

Rivian’s software services business can grow from $641 million revenues in 2025, $7 billion in 2030 and $36 billion in 2040, as the installed base grows in size exponentially. We value Rivian at $147, 1.3x 2030 EV/Sales, expensive vs Auto OEMs but not versus software/tech companies and in-line with EV startups such as Tesla and Lucid.”

Rivian Stock Price Forecast

Twelve analysts who offered stock ratings for Rivian in the last three months forecast the average price in 12 months of $85.00 with a high forecast of $147.00 and a low forecast of $35.00.

The average price target represents a 119.47% change from the last price of $38.73. Of those 12 analysts, eight rated “Buy”, four rated “Hold”, while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $94 with a high of $200 under a bull scenario and $40 under the worst-case scenario. The investment bank gave an “Overweight” rating on the electric vehicles manufacturer’s stock.

Several analysts have also updated their stock outlook. Barclays cut the target price to $115 from $120. Deutsche Bank initiated with a buy rating and set the target price to $130. Mizuho initiated with a buy rating and set the target price at $145.

However, technical analysis suggests it is good to sell as 100-day Moving Average and 100-200-day MACD Oscillator shows a selling opportunity.

Check out FX Empire’s earnings calendar

Why Tesla Stock Is Up By 7% Today

Key Insights

  • Sanctions on Russia provide support to EV stocks.
  • The rebound is led by Tesla, other EV companies follow.
  • Tesla stock will likely remain sensitive to geopolitical news in the upcoming trading sessions.

Tesla Stock Rallies As West Cuts Ties With Energy-Rich Russia

Shares of Tesla gained upside momentum as traders bet that harsh sanctions on Russia will push the world towards clean energy – and electric vehicle stocks.

Other stocks in the EV segment, like NIO and Rivian, also enjoy healthy gains today. NIO is up by 10%, while Rivian is gaining 7% during today’s trading session.

It looks that markets have underestimated the potential severity of sanctions on Russia. Howeer, the Western countries are ready to minimize ties with Russia, including ties in the energy space, which may serve as a bullish catalyst for the electric vehicle segment in the long term.

What’s Next For Tesla Stock?

Analyst estimates for Tesla earnings keep moving higher. Currently, the company is expected to report earnings of $10.48 per share in 2022, so Tesla stock is trading at 83 forward P/E.

The company’s shares have been under pressure as traders moved away from riskier assets, but the recent developments could provide long-term tailwinds for EV companies.

It should be noted that the leading tech stocks have mostly received support during the recent days of the escalating crisis, as traders viewed them as safe-haven assets. This factor may provide additional support to Tesla stock, in case the market continues to move lower.

I’d also note that Tesla stock is down by roughly 30% from its highs that were reached back in November 2021, so the market may see the recent pullback as a good opportunity to buy the shares of the leading EV company.

In the near term, the dynamics of Tesla stock will greatly depend on the general market sentiment and the developments of the current crisis around Ukraine. Additional sanctions on Russia in the energy space may serve as a bullish catalyst for Tesla stock.

For a look at all of today’s economic events, check out our economic calendar.

Why Tesla Stock Is Down By 6% Today

Tesla Stock Declines As Traders Sell Shares Of Richly Valued Companies

Shares of Tesla found themselves under strong pressure amid strong sell-off in equity markets. The stock has already bounced back from the $850 level to the $900 level, but it remains well below the previous close near the $944 level.

Other electric vehicle stocks like Rivian and Nio have also moved lower today. Both stocks are down by about 10% today.

The reason for this sell-off is the continuation of the move out of high-PE stocks on fears over rising rates. S&P 500 is down by more than 10% from all-time high levels, while the tech-heavy Nasdaq has already lost more than 15% of its value.

What’s Next For Tesla Stock?

Analyst estimates for Tesla earnings continue to move higher. Currently, analysts expect that Tesla will report earnings of $9.04 per share in 2022, so the stock is trading at almost 100 forward P/E.

It should be noted that earnings estimates for 2022 have improved by as much as 16% in the last three months, which explains why the market is still able to tolerate the sky-high valuation despite the huge sell-off in the high-PE segment.

However, Tesla is not immune to market trends, and its stock is down by roughly 25% from the highs that were reached back at the beginning of this year. It remains to be seen whether speculative traders will rush to buy Tesla shares after the recent sell-off. The company remains richly valued, and if the market remains focused on risks, high-PE stocks will continue to suffer.

It should be noted that Tesla will release its fourth-quarter report on January 26, after market close. Thus, traders will soon get more data on the company. In case the report exceeds analyst expectations, and Tesla’s guidance is optimistic, the stock may break the current downside trend despite the global move out of riskier assets.

For a look at all of today’s economic events, check out our economic calendar.

Shares of EV Start-up Rivian Plunged as Much as 16.5%, Fall Below Their Issue Price

Shares of Rivian, manufacturer of electric vehicles, dropped as much as 16.5% and fell under their issue price of $78 for the first time on Thursday in tandem with broader losses in electric-vehicle stocks.

According to a Reuters report, Rivian’s stock also dropped a day after Amazon.com, one of Rivian’s biggest investors, announced the signing of a deal with Fiat and Alfa Romeo carmaker Stellantis. Stellantis and Amazon.com said they would collaborate on the development of electric delivery vans using Amazon.com’s software and Stellantis’ software.

Last month, the Irvine, California-based EV startup reported a quarterly adjusted loss of $7.68​​ per share in the fiscal fourth quarter ended in Sep 2021, worse than the Wall Street consensus estimates for a loss of $5.52 per share. The company’s revenue also came in below analysts’ estimates at $1.00 million.

Rivian shares plunged as much as 16.5% to $75.13, which is way below their IPO price of $78 on Thursday.

Analyst Comments

Rivian is a well-capitalized pure EV startup OEM that can leverage its strategic relationship with Amazon to derive scale and build software and services competencies for its consumer business,” noted Adam Jonas, equity analyst at Morgan Stanley.

“We forecast Rivian to sell ~1.5mn BEVs annually in 2030 (801k Consumer / 653k Commercial). We forecast Rivian’s total revenues to grow at a 34% CAGR from 2025 to 2030. Rivian’s software services business can grow from $641mn revenues in 2025, ~$7bn in 2030 and ~$36bn in 2040, as the installed base grows in size exponentially. We value Rivian at $147, ~1.3x 2030 EV/Sales, expensive vs Auto OEMs but not versus software/tech companies and in-line with EV startups such as Tesla and Lucid.”

Rivian Stock Price Forecast

Fourteen analysts who offered stock ratings for Rivian in the last three months forecast the average price in 12 months of $134.64 with a high forecast of $170.00 and a low forecast of $94.00.

The average price target represents a 66.04% change from the last price of $81.09. Of those 14 analysts, ten rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price range of $94-$165 with a high of $200 under a bull scenario and $40 under the worst-case scenario. The firm gave an “Overweight” rating on the electric vehicles manufacturer’s stock.

Several other analysts have also updated their stock outlook. Barclays cut the target price to $115 from $120. Deutsche Bank initiated with a buy rating and set the target price to $130. Mizuho initiated with a buy rating and set the target price at $145.

Check out FX Empire’s earnings calendar

Why Rivian Stock Is Down By 11% Today

Rivian Stock Falls After Company’s First Quarterly Report

Shares of Rivian Automotive found themselves under strong pressure after Rivian released its first earnings report as a public company.

The company reported revenue of $1 million and a GAAP loss of $12.21 per share, missing analyst estimates on earnings and meeting them on revenue.

Rivian announced that it had 71,000 R1 net preorders in the U.S. and Canada. As of December 15, 2021, Rivian produced 652 R1 vehicles and delivered 386 of those. Rivian has also stated that it planned to increase its annual production capacity to 200,000 per year at its factory in Normal, Illinois. The company also plans to have an annual capacity of 400,000 vehicles in its Georgia facility.

The company’s plans look impressive, but the market focused on the current deliveries. Ramping up production from low levels is notoriously difficult, and it remains to be seen whether Rivian will be able to meet its goals in the upcoming years.

What’s Next For Rivian Stock?

Rivian stock made an attempt to settle above the $180 level a few days after the IPO but lost momentum and moved below the $100 level after the release of the earnings report.

The high volatility is understandable as Rivian is a story-driven stock. The company’s third-quarter revenue is just $1 million, and its ability to survive and thrive depends on its success in ramping up production.

Judging by the recent performance of smaller EV names like Lordstown Motors, NIO, Lucid Group, as well as the performance of Tesla stock, traders have become concerned about the high valuation of the whole EV segment at a time when central banks look ready to raise rates.

In this light, the near-term dynamics of Rivian stock will also depend on general market sentiment towards EV producers while traders will wait for the future production updates from the company.

For a look at all of today’s economic events, check out our economic calendar.

Why Harley-Davidson Stock Is Up By 12% Today

Harley-Davidson Stock Rallies After Announcement Of SPAC Deal For Its EV Unit LiveWire

Shares of Harley-Davidson gained upside momentum after the company announced that it will take its EV division LiveWire public via a SPAC deal. LiveWire is expected to trade under the ticker LVW.

The recent IPO of Rivian Automotive highlighted strong demand for EV producers. Investors and traders look ready to buy shares of anything EV-related regardless of valuation as they want to establish positions in the hot segment of the market.

It remains to be seen whether this trend will remain intact when the Fed begins to raise rates in 2022. At this point, investors are confident that Harley’s EV division will get higher valuation on a standalone basis.

What’s Next For Harley-Davidson Stock?

Analysts expect that Harley-Davidson will report earnings of $3.7 per share this year and $3.53 per share in the next year, so the stock is trading at roughly 12 forward P/E. This is cheap for the current market environment, but traders should keep in mind that the company’s earnings are projected to decline next year.

S&P 500 is close to all-time high levels, and the market remains focused on growth. In this environment, a cheap stock like Harley-Davidson may not get enough support from buyers if the company’s earnings are moving lower. In this light, it’s not surprising to see that Harley-Davidson stock lost upside momentum in May and has been under pressure until the announcement of the SPAC deal.

I’d also like to highlight a recent example of a similar move, when a company made an attempt to unlock value for shareholders by taking public its unit in the “hot” market segment. Intel stock enjoyed strong support after the company announced that it would take Mobileye public, but traders used higher prices as an opportunity to take some profits off the table. It remains to be seen whether Harley-Davidson stock will find itself under similar pressure, but it’s a risk that should be closely monitored.

For a look at all of today’s economic events, check out our economic calendar.

Consumer Price Index: Key Focus This Friday

Consensus is calling for a headline number of +6.8% but estimates range as high as nearly +8%. Investors will be closely scrutinizing underlying details for signs that price gains are starting to look more permanent. This would be most evident in the so-called “core” rate that strips out food and gas prices.

After moderating somewhat this summer, the gauge made a substantial jump in October, indicating prices are climbing for a more broad range of consumer goods that are unlikely to be rolled back.

Inflation

The current wave of inflation is being fueled on several fronts, but primarily economists blame a lack of supply to meet booming consumer demand for goods. Some equate it to the same type of supply-demand mismatch witnessed following World War II when Americans were in the mood to spend but wartime rationing had left many products in short supply.

By 1947, inflation had jumped to over +20%. However, by the end of 1948 it was hovering just over +8%, and less than a year later the economy had flipped into deflation.

Some economists argue the resulting recession of 1948-49 was due to the central bank adopting policies to fight inflation even as it had already begun declining on its own. This is an example from history that more bulls have been citing in their arguments cautioning against the Fed moving too fast as it looks to curb the current bout of rising prices.

What that period did not have was the labor shortage that American businesses face today. Many bulls believe the currently fierce demand for workers is largely driven by pent up consumer demand that will likely begin to fade next year. There are concerns that the issue is a more fundamental shift that proves to be permanent, though, which could keep wage pressures in place longer-term and present a whole different set of problems for the Federal Reserve.

Data to watch

Next week, the central bank is expected to announce plans to accelerate the pace of its asset “taper” which would in turn move up the timeframe for interest rate hikes to begin. What bulls really want to see is assurances from the Fed that they will remain flexible and willing to adjust policy if the economy shows signs of stumbling.

The two day policy meeting concludes on Wednesday, 12/15, and will be followed up by a press conference by Fed Chair Jerome Powell. The central bank will also publish new economic projections which will include inflation forecasts and median range interest rate projections, aka the “dot plot.”

The previous September forecast projected the Fed’s short-term interest rate target at +0.3% for 2022, +1.0% for 2023, and +1.8% for 2024.

Other data set for release next week includes the Producer Price Index on Tuesday; Retail Sales, Empire State Manufacturing, Import/Export Prices, Business Inventories, and the NAHB Housing Market Index on Wednesday; and Housing Starts, the Philadelphia Fed Index, Industrial Production, and IHS Manufacturing on Thursday.

Next week also brings central bank policy updates from Bank of England and the European Central Bank on Thursday.

On the earnings front, next week’s highlights are Adobe, FedEx, and Rivian, all of which release results on Thursday.

Overall, I still think there could be more extreme volatility and downside risk into next week’s Fed meeting so I have a few short hedges in place. I suspect once we get past the Fed meeting and any possible knee-jerk there might be a more clear path for the bulls to run into yearend.

 

Why Intel Stock Is Up By 4% Today

Intel Stock Rallies As Traders Cheer The Company’s Decision To Take Mobileye Public

Shares of Intel gained strong upside momentum after the company announced that it would take Mobileye public.

Intel stated that Mobileye’s revenue should increase by more than 40% in 2021 compared to 2020. The company noted that it would maintain majority ownership of Mobileye and that Intel and Mobileye would “continue co-development of solutions and technologies to further both companies’ interests in the automotive tech market”.

The success of Rivian Automotive IPO and the recent rally of Apple stock, which was triggered by speculations about the company’s potential autonomous car, showed that market’s appetite for bets on the future of mobility remained very strong.

In this environment, Mobileye’s listing may unlock value for Intel shareholders. Intel stock lagged peers in the tech space, and it looks that management felt pressured to improve performance and show that the company is focused on delivering value to shareholders.

What’s Next For Intel Stock?

Analysts expect that Intel will report earnings of $5.28 per share in 2021 and $3.7 per share in 2022, so the stock is trading at roughly 14 forward P/E. This is cheap for a tech stock, but traders are mostly focused on growth when buying stocks in this market segment, so it’s not surprising to see that Intel stock has been under pressure for many months.

In order to break the downside trend, Intel stock needed upside catalysts, and it looks that Mobileye may serve as such a catalyst. Mobileye’s value was “hidden” inside Intel story, but now traders who were not comfortable with betting on Intel as a whole could purchase Mobileye shares. In such situations, the pool of potential investors increases, which should provide additional support to Intel stock.

It should be noted that Intel stock pulled back from $55 to $53 during today’s trading session as some traders decided to take profits off the table, but the stock should have a good chance to develop additional upside momentum in the upcoming trading sessions.

For a look at all of today’s economic events, check out our economic calendar.

Why Tesla Stock Is Up By More Than 5% Today

Tesla Stock Is Moving Towards All-Time Highs

Shares of Tesla gained upside momentum and moved towards the $1,200 level after Elon Musk tweeted that Model S Plaid would probably come to China in March.

The general market sentiment, which remains bullish, provided additional support to Tesla stock. S&P 500 is trading at all-time high levels, and investors’ appetite for risk remains strong.

It should be noted that the market remains focused on leading tech stocks like Apple, Microsoft and NVIDIA which are trading at record highs today. The current rally is not broad as traders are concentrated on a handful of mega-cap stocks, and this environment is bullish for Tesla.

What’s Next For Tesla Stock?

Tesla stock has easily found buyers near the $1,000 level after the recent pullback, which was caused by Musk’s sales of stock. The market has easily absorbed those sales, which indicates that demand for the Tesla stock remains strong.

Meanwhile, analyst estimates continue to move higher. Currently, analysts expect that Tesla will report earnings of $6.06 per share in 2021 and $8.17 per share in 2022, so the stock is trading at $147 forward P/E. However, traders do not look worried about the extremely high valuation of the stock as they rush to bet on the future of the electric vehicle market.

I’d note that shares of Tesla’s emerging competitor Rivian Automotive have declined from the $179 level to the $115 level in just four trading sessions on valuation concerns after the huge rally, but it remains to be seen whether such concerns will hurt shares of Tesla which, unlike Rivian, is making thousands of cars.

All in all, Tesla stock has a good chance to get to the test of all-time highs near $1245 in case the general market stays bullish as demand for fast-growing tech stocks remains very strong and traders are ready to ignore valuation concerns.

For a look at all of today’s economic events, check out our economic calendar.

Why Tesla Stock Is Trying To Settle Below $1,000

Tesla Shares Keep Moving Lower As Traders Stay Focused On Musk’s Stock Sales

Shares of Tesla are down by more than 4% at the start of today’s trading session as traders remain focused on Musk’s share sales.

Tesla’s CEO Elon Musk has already sold $6.9 billion worth of Tesla shares after a Twitter poll indicated that users wanted him to sell a 10% stake in the company. While Musk was expected to start selling his stock to deal with taxes related to stock options, the timing (and the form of the announcement) surprised the market.

For some traders, Musk’s Twitter poll looked like a decision to take some profits off the table after a huge rally in Tesla shares which took them from the $550 level in May to the highs near $1240.

What’s Next For Tesla Stock?

Tesla stock has already pulled back by about 20%, but it remains to be seen whether speculative traders will be ready to buy shares of the EV maker as Musk’s stock sales remain a problem.

Analyst estimates continued to move higher in recent weeks. Currently, analysts expect that Tesla will report earnings of $6.05 per share in 2021 and $8.08 per share in 2022, so the stock is trading at 124 forward P/E.

The recent IPO of Rivian Automotive highlighted demand for electric vehicle companies, and it does not look that Tesla’s rich valuation is a big problem in the current market environment.

However, the near-term dynamics of Tesla stock will depend on market mood and general risk appetite. Currently, the market is bearish due to Musk’s stock sales, and the company will need to come up with additional catalysts to change the trend of its stock.

It should be noted that the pullback from recent highs was very fast, and it looks that some traders who were willing to take profits off the table were not prepared for the move. These traders may create additional selling pressure in the upcoming trading sessions, although support for Tesla stock should gradually grow as speculative traders take another look at the company’s shares after a 20% pullback.

For a look at all of today’s economic events, check out our economic calendar.

Rivian’s Stock Price Continues Rallying, Market Cap Surpasses General Motors

The shares of electric vehicle startup Rivian have rallied for the second consecutive day since it was listed on the stock exchange, with its market cap now surpassing that of industry giant General Motors.

RIVN Up by More Than 18% Today

The shares of electric vehicle startup Rivian continued to climb higher today after an excellent debut yesterday. The startup, backed by Amazon and Ford Motors, has already surpassed the market cap of General Motors and Ford.

At press time, RIVN has a market cap above $100 billion, surpassing that of Ford and General Motors. Since debuting in the market, RIVN has added more than 20% to its value, making it one of the top-performing stocks in the US at the moment.

General Motors’ market cap is around $89 billion, while Ford is worth around $77.7 billion. However, Rivian’s market cap is still far behind that of the industry leader, Tesla, which is roughly $10 trillion.

The increase in valuation means that Amazon’s 20% stake in the business is now worth roughly $20 billion while Ford controls about $12 billion in the company. The surge in price and market cap is astonishing, considering that Rivian expects to generate just $1 million in revenue for the third quarter and doesn’t have an established business model at the moment.

Rivian has overtaken some market players by launching a fully electric pickup, but the company is yet to produce high volumes of its vehicles. Amazon has already ordered 100,000 of the pickups to be delivered by 2030 as it intends to use them in its delivery fleets.

RIVN stock exchange. Source: FXEMPIRE

RIVN’s Rally Could Cool Down Soon

RIVN’s rally has taken the market by surprise, and no analyst had expected such a massive gain within a short period. However, the rally could cool down over the coming trading sessions as the market adjusts.

At press time, RIVN is trading at $118 per share but could dip below the $100 level if the market adjusts over the coming trading sessions.

Why Rivian Automotive Stock Is Set To Rally Today

Rivian Automotive Prices IPO Above Expected Range

Rivian Automotive priced its IPO at $78/share, so the company enters the marketplace with a valuation of $66.5 billion. In comparison, Ford is valued at $81 billion while General Motors has an $85 billion market cap. Previously, Rivian was expected to price its IPO at $72 – $74. It should be noted that premarket indications show that Rivian stock could open above the $120 level.

The company will raise $11.9 billion from the IPO, and it will have a lot of money to invest in its business. Traders and investors look ready to pay a major premium for the shares of the electric vehicle startup as they do not want to miss a high-growth story in a market that is trading near all-time high levels.

It should be noted that Rivian is supported by Amazon, which owns a roughly 20% stake in the company. Clearly, Amazon’s involvement serves as a material upside catalyst for Rivian shares as Amazon has the ambition to compete with Tesla in the EV market.

What’s Next For Rivian Stock?

The expected price range for Rivian’s IPO has been raised several times which highlights the strength of demand for the company’s stock.

There’s a lot of buzz around Rivian, and the stock has a decent opportunity to gain upside momentum in the upcoming trading sessions as many retail traders will likely rush to get a piece of another hot electric vehicle stock.

At this point, it’s too early to talk whether the valuation at IPO is justified, and the near-term direction of Rivian stock will depend solely on market sentiment.

The recent rally in Tesla shares showed that traders and investors are ready to pay a huge premium over stocks of traditional automakers, and Rivian stock will have an opportunity to ride the wave of investor enthusiasm. Traders should be prepared for fast moves as the stock will certainly experience elevated volatility in the next few weeks.

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