Why is Rivian Stock Down Today?

Rivian has endured a rocky start to life as a publicly-traded company following its blockbuster debut, but should shareholders be worried?

Jan. 11, 2022

Rivian (NASDAQ: RIVN) catapulted itself onto Wall Street in November last year in the largest IPO of the year. Following a brief flirtation with a valuation of $100 billion, the hype surrounding the California-based automaker seems to have died down. 

Its stock price closed down over 5% yesterday, a trend that has seen the company plummet by over 30% in the past month alone. 

Why is Rivian stock down?

Yesterday’s price decline is undoubtedly linked to the company announcing that it had failed to meet its vehicle production targets for 2021. The firm had aimed to manufacture 1,200 electric vehicles (EVs) over the course of the year but fell short by 185 units. Despite the company anticipating this failure to meet targets in its first quarterly update as a private company – an announcement that saw a 10% drop in mid-December – investors couldn’t be stopped from selling off.

Rivian also announced yesterday that its Chief Operating Officer Rod Copes had left the company last month in a retirement that was planned for months. This very well could have added to shareholder concerns as the company looks to start ramping up production.

What does this mean for investors?

Unfortunately, some of the reasons Rivian held value to investors are being slowly eroded away. The company held a distinct first-mover advantage in the electric pickup truck market, but legacy manufacturers are now beginning to catch up. Most notably, Ford will begin to sell its highly popular electric F-150 Lightning pickup this Spring. 

Rivian also suffered heavily earlier this month when Stellantis announced that Amazon will be the first commercial customer for its Ram ProMaster EV. Amazon currently owns roughly 20% of Rivian and had previously given the automaker a contract for 100,000 vehicles to be fulfilled by 2030. An Amazon spokesperson was quick to note that “this doesn’t change anything about our investment, collaboration, or order size and timing” with Rivian.

Rivian still maintains some value to investors despite these significant issues. The firm’s first offering, the R1T pickup truck, has been extremely well received by the motoring community. Plans for a new manufacturing facility in Georgia will also boost overall production when it becomes fully operational in 2024. 

It will be interesting to see how the company fares throughout 2022 as more and more automakers begin to truly focus on the EV market. If it can navigate the next year or two and continue to increase production and sales, Rivian could well end up being a resounding success. Until this proof is offered, however, I will be watching the company closely as opposed to actively investing.