Rivian: VW waves EV wand
Imagine for a moment that you’re a Californian EV manufacturer expecting to lose about $3bn this year, and that despite having raised $13.5bn in an IPO in November 2021, it looks like the piggy bank will be empty some time in 2025. With a share price down over 90% from its peak, it’s all looking a bit goodnight Vienna unless a substantial fairy godmother does a bit of wand waving, and this is precisely the role that Volkswagen (VW) played for Rivian, announcing an investment of up to $5bn by 2026.
VW has been struggling with the electric vehicle transition, with shipments down 24% in Europe in the first quarter, amid a general feeling that its technology is behind the pack to the extent that it’s a better option to buy Rivian’s than to keep on struggling to develop its own. Rivian may only have produced 57,000 vehicles last year, but these are big, rugged SUVs and trucks that wouldn’t look out of place in an episode of Yellowstone.
While VW blundered by developing cupholders that were too small for the great buckets of soda that are de rigueur in the land of the free, Rivian’s vehicles have storage everywhere, including a gear tunnel across the width of the truck that would be perfect if you had a small to medium-sized body to dispose of. Its marketing revolves around saving the world and exploring the wilderness, though obviously your sense of adventure had better not take you too far from a charging station, or you’ll find yourself with a couple of tons of inert steel and a long walk home.
Nike: Shoo-in no longer
All is not well at the shoe dog, with a warning from the world’s largest sportswear manufacturer that sales would drop this year, causing its share price to tank by 20% in a day, the biggest drop in its 44 years as a publicly quoted company.
The share price has now declined by 48% over a three-year period, as the company seems to be lurching from restructuring to reorganisation, tinkering with organisational structures while failing to address the reality that it is having its lunch eaten by smaller, nimbler rivals.
A prime example is On, the Swiss shoe brand that saw its sales grow by almost 50% last year. When Roger Federer, who had been with Nike since he was 13, left in 2019 to take up a $300m 10-year contract with Uniqlo, he also did a deal with On that gave him 3% of the company, worth a cool $180m when On went public in 2021, and he has collaborated in the design of a tennis shoe, the Roger Pro. Nike has responded by giving a $160m 10-year contract to Carlos Alcaraz, a fairly solid payday for a 21-year-old.
Then there’s Hoka, the giant-soled running-shoe company that has seen the share price of its parent company rise by 103% in a year.
These specialist, upmarket brands are gaining market share at considerably higher gross margins than Nike’s, while Nike churns out endless Air Jordans and Air Force 1s and continues to lose traction in the high-performance market. It’s got a lot to do to regain the confidence of investors and customers alike.
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