Why Rivian Stock Is Sinking Today

What happened

Rivian Automotive (RIVN -9.96%) the stock took a beating on Thursday and was trading down 9.4% at 12:40 p.m. ET. These are tough times for a Rivian investor: growth stocks took a beating today, as did Rivian’s quarterly earnings release and a key date that could trigger volatility in the electric vehicle (EV) stock.

So what

Chances are you’ll see red in most stock prices you watch today. The broader market is plunging on fears of persistently high inflation and slowing economic growth now that the Federal Reserve has hinted it may not raise interest rates as much as expected. A sluggish economy doesn’t bode well for companies like Rivian that are just getting started in a high-growth industry like electric vehicles.

Selling pressure is only fueling investor fears in Rivian as the company nears two crucial dates.

Image source: Getty Images.

On May 9, the 180-day initial public offering (IPO) lock-up period for early investors in Rivian will expire. As the expiration of the IPO lockup will allow insiders to sell their stake in Rivian, the market is rightly feeling nervous about Rivian shares.

To be clear, it is not necessary for insiders to sell shares. Still, the market fears the worst, especially after two of the major shareholders of Rivian, the automotive giant Ford Motor Company and the e-commerce giant Amazon recently announced massive losses for their respective last quarters after the value of their investment in Rivian plunged alongside the stock price. Many believe that these two companies would like to get rid of the Rivian overhang.

Nor are expectations for Rivian’s next first-quarter earnings report on May 11 encouraging. Lately, Rivian has repeatedly warned of rising costs and supply pressures, so much so that it even said it could have produced 50,000 vehicles this year had it not been for chain issues. supply. Instead, the electric vehicle maker plans to build just 25,000 vehicles in 2022.

Now what

Rivian investors saw a silver lining earlier this week when the state of Georgia announced it would give Rivian $1.5 billion in incentives and tax breaks to build a manufacturing plant. $5 billion in the state. Although the incentive program comes with runners, it’s a relief because Rivian’s plans in Georgia have been met with opposition from residents. Investors believe the deal should help Rivian accelerate construction of the plant, which will also be Rivian’s second manufacturing facility.

The euphoria was short-lived, however, as earnings and macro jitters made Rivian investors cautious.

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