Market News

Silicon Valley Bank Causes EV Stocks to Slump

Without question, the biggest economic event of the last few days was Silicon Valley Bank (NASDAQ:SIVB) and its massive plunge. It was the largest bank failure since the 2008 financial crisis, and its knock-on effects will stretch throughout multiple industries. Vineyards everywhere are recoiling in horror, and now there’s one more problem: electric vehicle stocks.

While some electric vehicle stocks have recovered throughout Monday afternoon’s trading—Tesla (NASDAQ:TSLA) was up a bit in the afternoon—others, like Rivian Automotive (NASDAQ:RIVN) were down in varying amounts. Some saw a downright cataclysmic day of trading. Faraday Future (NASDAQ:FFIE) lost over 13% at one point, and Arrival Group (NASDAQ:ARVL) plunged just over 15%. The biggest loser of all was Lightning eMotors (NASDAQ:ZEV), which saw share prices drop over 37%. A lot of those losses can be traced back to Silicon Valley Bank’s collapse, now ranking as the second-largest bank collapse in U.S history.

Silicon Valley Bank was well-known as a funding provider for start-up businesses. With it out of the picture, funding may be harder to come by for those start-ups. That’s especially the case for start-up EV companies that don’t have much of a track record that could be used as a selling point. Granted, Tesla likely won’t have this problem. It has plenty of sales it can point to when it needs short-term funding. But Faraday Future? Arrival Group? These have much less opportunity to sell themselves to financing operations on their own merits.

Perhaps even worse, many of these stocks don’t have analyst coverage. However, Rivian and Lightning do, and the difference between these two is substantial. Rivian stock is considered a Moderate Buy by analyst consensus, while Lightning is regarded as a Hold. The former offers an upside potential of 104.14% thanks to its average price target of $28.11, while the latter’s $3.30 average price target gives it a phenomenal upside potential of 838.3%.


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