When Tesla’s (TSLA) CEO sold shares, the stock barely lost its $1 trillion market cap. status. Rivian (RIVN) said it would delay its SUV deliveries until Spring 2020 at the earliest. RIVN stock is sharply lower than its 52-week high but is otherwise holding its stock price.
Despite a delayed sell-off, both companies may have marked a peak in Electric Vehicles.
Tesla’s insider selling is a red flag for investors. They may have high taxes to pay. By selling shares, they are immune to TSLA stock falling. The technology index is at overbought territory and valuations are priced for excessive growth rates over the next five years. In addition, the Federal Reserve is keeping interest rates at unsustainably low levels and is still buying trillions in debt.
The market cannot handle the excess cash liquidity. With nowhere to go, investors must allocate nearly all cash to stocks. This direction will reverse abruptly once the Fed identifies inflation as permanent. It may panic by tapering further and raising interest rates earlier than expected.
EV is especially at risk of falling the most. Rivian sells very few models. It may fail to deliver more R1S pickup SUVs and R1T all-electric pickups the market expects.
