Shares of up-and-coming electric vehicle (EV) startup Rivian (NASDAQ:RIVN) surged following its initial public offering (IPO) late last year. In fact, RIVN stock skyrocketed more than 100% from its IPO price of $78. However, the stock is down over 40% in the past three months. Now, investors are skeptical about the stock and its ability to hang tough in the hotly competitive EV sector. With no revenues or competitive advantages, all signs point to a tough road ahead.

Currently, RIVN stock sports a colossal market capitalization of more than $50 billion despite the pullback. It’s also trading at 945 times forward sales. That is an insane number, of course, which is remarkable considering how frothy the EV market has been over the years.

In particular, Rivian aims to become a leader in EV pickup trucks, but it does face significant risks. For one, the Ford (NYSE:F) F-150 Lightning has been getting record reservations. Moreover, Tesla (NASDAQ:TSLA) and General Motors (NYSE:GM) have plans to release their own EV truck models soon.

Not too long ago, Rivian had been flying high after striking a deal with Amazon (NASDAQ:AMZN). However, it appears that Amazon will be partnering with multiple EV providers for its last-mile delivery operations. Hence, with multiple red flags, it’s best to pass on RIVN stock for now.

RIVN Stock: Partnering with Amazon

A lot has been made about Rivian’s partnership with Amazon. Most investors believed it could be a breakthrough for Rivian and a long-term growth driver.  Now, though, that’s unlikely to be the case.

Amazon is looking to convert its fleet of delivery vehicles to EVs in order to lower its carbon footprint. In doing so, the company partnered with Rivian to provide electric delivery vehicles and has already placed a 100,000 vehicle order.

However, like I said, Rivian is not the only EV maker the company will be relying on. Rather, Amazon recently signed an agreement with Stellantis (NYSE:STLA) to provide an EV version of its lightweight commercial vehicle, the Ram ProMaster. The agreement details haven’t been disclosed yet, but it could put “thousands of BEV ProMasters on the road every year.”

This development is essentially a reminder to Rivian and RIVN stock bulls that the company doesn’t operate in a vacuum. There is immense competition in the EV space. That will continue to challenge the EV maker down the road.

A Tough Road Ahead

Rivian is a new entrant in the fast-growing EV sector. However, it appears to have no real competitive advantages to hang tough against its peers. Moreover, it doesn’t have the funding or the operational history to back up its lofty valuation.

That’s not all, though. The company will also likely run into the same operational teething problems that have impacted the growth trajectory of EV stalwarts. In fact, Rivian has already had to delay its deliveries.

On the other hand, competitors like Tesla and Ford already have the scale to meet demand. Meanwhile, Rivian is just starting to build its infrastructure. The company has plans to deliver close to 300,000 vehicles per year, from a starting base of 40,000 vehicles at this time. These numbers are modest compared to some of the bigwigs and incumbents of the sector. Yet, RIVN stock trades at an extraordinarily high valuation.

The Final Word on Rivian

Rivian is a pre-revenue EV company that already trades like an established player in the sector. The company still has plenty to learn about producing at scale and managing its teething issues. What’s more, its peers have proven products and high-functioning systems on the flip side. Plus, the company’s plans are relatively modest, only adding to the bear case.

All told, it’s tough to feel excited about RIVN stock at this point.

On the date of publication, Muslim Farooque did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.