Investors love growth, so they're typically willing to pay a premium for fast-growing companies. The thesis is that they'll eventually grow into their valuations.

However, some growth stocks seem priced to perfection. That means shares of each could underperform if the company doesn't deliver on its lofty expectations. Three absurdly priced growth stocks are Rivian Automotive (RIVN 1.85%), Lucid Group (LCID -2.86%), and QuantumScape (QS 0.56%). Here's why investors might want to rethink whether these stocks belong in their portfolios.

A loss leader

Electric vehicle (EV) maker Rivian Automotive currently has a $19 billion market cap. There are many ways to put that valuation into context. For example, it's about a third of the size of larger automakers like Ford Motor (F 6.10%) and General Motors (GM 1.98%).

However, while investors value Rivian like a major automaker, it only produced 24,337 vehicles last year (and delivered 20,332 to customers). That's a fraction of the sales volumes of its larger rivals: Last year Ford sold nearly 1.9 million vehicles, including 15,617 units of its F-150 Lightning electric truck, while GM sold more than 2.1 million vehicles.

Investors are paying a high price for Rivian even though it's losing money hand over fist. During the third quarter, the company generated $536 million in revenue but reported a staggering loss of $1.72 billion. Analysts estimate that it costs Rivian $220,000 to produce each vehicle (based on cost of goods sold) that it's selling for an average of $81,000.

While the company has a large cash balance of $13.8 billion to help cushion the blow, that money will only last through 2025. If Rivian isn't generating cash by then, it will need outside capital to continue funding its operations. That could dilute existing investors and weigh on the share price.

Contrast that with Ford and GM, which are generating free cash flow. Ford's adjusted free cash flow was $9.1 billion last year, while GM produced $10.5 billion in free cash. That's giving them the money to invest in EVs and return capital to shareholders through dividends. It's also worth noting that Ford's free cash flow got a boost from its decision to cash in on its stake in the money-losing Rivian.

Burning through cash

Lucid Group is another high-priced EV maker. It currently has an $18.5 billion market cap. That's a high price for a company that only produced 7,180 vehicles last year.

The EV maker is also losing money hand over fist. It only generated $195.5 million in revenue in the third quarter, but lost $670.2 million. While the company had $3.85 billion of cash at the end of the quarter, its current cash burn rate would see it run out of money by the end of next year.

That's leading the company to seek additional funding. It aims to raise about $1.5 billion through an additional investment by Saudi Arabia's Public Investment Fund, its largest shareholder. While that backer can help keep the company afloat, it's a long way from making money to justify its lofty valuation.

Running low on power

Battery maker QuantumScape currently has a market cap of over $4 billion. That's a lot for a company that doesn't currently generate meaningful revenue. It shipped its first battery cells to customers toward the end of last year, so it's a long way from making money.

The company reported a net loss of $426 million last year as it continued spending heavily on research and development. While QuantumScape has over $1 billion in cash and marketable securities to help fund its operations, it only has enough money to last until the second half of 2025 at its current burn rate. The company is looking for opportunities to raise capital to extend its cash runway farther into the future; it will likely need to sell more stock and dilute existing investors.

Superspeculative stocks

Rivian Automotive, Lucid Group, and QuantumScape hold tremendous promise as they invest in developing electric vehicles and batteries to power the future of transportation. However, all three companies spend a lot of money pursuing that opportunity. Since it's possible that they could run out of money before they reach the road to sustainable profitability, they're very speculative investments.

Given that risk, investors should rethink whether these growth stocks belong in their portfolios. Everything would have to go right for these stocks to deliver big gains on their already lofty valuations.