Why did Rivian Automotive stock drop today?

Michael M. Santiago/Getty Images News

Rivian Automotive (NASDAQ:RIVN) fell sharply after the electric vehicle maker increased prices of its vehicles by about 20% due to inflationary pressures and higher component costs. The price hikes for some configurations are over $10K and apply to people with reservations on the books.

Analysts have warned that the new higher pricing level could impact future demand for Rivian (RIVN) models and reset sales expectations, although it should help with margins.

Shares of RIVN plunged 12.84% and traded as low as $53.30 vs. the 52-week trading range of $50.00 to $179.47.

Comments

[pyrite99]

I'm no expert on RIVN, but there abysmal decision to raise prices retroactively and then do a PR reversal, indicates desperation. How many vehicles can they make at a loss? RIVN has approximately $2.9B in cash (10K) but how long will that last? I can't see the stock trading for anything more than book value plus cash until RIVN can prove manufacturing at scale and with a profit. They may need a bailout from AMZN soon.

[Up and Away]

@pyrite99
Incorrect PR does not make a bad company. Timing was wrong to increase a new EV without saying that you will Honor the original placeholders even if costs have gone higher. Still a great EV.

[pyrite99]

@Up and Away The roll-back on pricing could cost RIVN around $850 million in future revenues, assuming cancellations, RBC Capital Markets analyst Joseph Spak wrote in a note to clients on Thursday. Ouch. Cash burn will be devastating. I'd like them to succeed, but I'm skeptical of managements that hype their prowess before they've manufactured at scale.

[Up and Away]

@pyrite99
Agree it was a major error but the EV will still be a winner in due time.

[Laura Lea]

I was eyeballing RIVN because it is close to the low. Just hesitant as there is no support except the low of $50. Price at 50.97 right this second )o:

[fadi999]

Long apologetic email from the CEO received 30 minutes ago. He acknowledges that: "I have made a lot of mistakes since starting Rivian more than 12 years ago, but this one has been the most painful."

Then offers this:

"For anyone with a Rivian preorder as of the March 1 pricing announcement, your original configured price will be honored. If you canceled your preorder on or after March 1 and would like to reinstate it, we will restore your original configuration, pricing and delivery timing. Our team will be sending an email in the next few days with more details."

I canceled my order (happily) but will consider going back depending on how they structure the next steps and a couple of other variables that I prefer not to share online.

[JeffSizemore]

Correct me if I’m wrong but aren’t all those vans being delivered only to amazon? Nobody else can buy them right?

[ithinking]

Without the AI like in Tesla's car, I would rather buy F or GM's EV truck than RIVN's.

[Ishi Kenjo]

@ithinking I prefer Tsla & the cheap European car makers.

[Up and Away]

Poor timing all around. You cannot have a better backer and buyer than Amazon. Covid, Pandemic and now war. Just one more thing to get through.

[Riyas Nr]

Soon you can buy LUCID, RIVIAN and NIO around 18-30 range. I am waiting for building a mixed bag of these three

[farwest]

@Riyas Nr Sure hope you don't buy on basis of relative share price?? Yikes.

[Archman Investor]

"Say, say, 2000-00, party over
Oops, out of time
So tonight I'm gonna party like it's 1999"

Past is present, history repeats itself. The garbage keeps getting sold down while Wall Street laughs all the way to the bank.

[farwest]

@Archman Investor Lots of Wall Street bought the hype and are far underwater.

[SomeGuy14]

I guess you’re hoping for something more than the obvious: that it’s pets.com for 2022

[Wolf Den]

All things considered it's not as bad as promising a cyber truck and never building it--talk about betrayal. How many bullshit tweets that lead nowhere?

[User 52337389]

@Wolf Den careful, that is blasphemy for the Elon cult for someone to call out the ever evolving time table of the Cybertruck. I'd sell pitchfork, but alas, broken supply chain and I am sold out 😏

[Wolf Den]

@I_Buy_Quality_REITS The good news for the cult is the Winter is almost over and they wont need to rely on those broken Tesla heaters.
Sing along:
Where oh where is my cyber truck now?
Where oh where can it be...
Rivian and Ford are building trucks now
And soon GM will make three...

[John Kass]

I would rather be owning Lordstown Motors (RIDE) at $3 than this stock that IPOd over $100 and is now in the 50s

[McGonicle]

@John Kass no factory no orders + secondary offering post SPAC despite "fully funded" promise from CEO? That?

The problem with all of the standalone EV cos, save TSLA, is that they 1) dont make any cars 2) may not ever make many (or any) cars 3) no one can tell when they may or may not actually make cars instead of selling stock 4) many of them that people see as EV companies actually plan to sell primarily hybrids, not a dedicated EV.

[PennyPlanSupporter]

I have a lemonade stand and I sold 3 glasses of lemonade last weekend but it is electric so my stand is valued at $3 billion.

[Lamps5]

@PennyPlanSupporter quite possibly the best and most accurate comment on SA of all time.

[AI STONKS]

Because this valuation makes no sense. Simple.

[unan2010]

@SrupB also it sold 10 cars...

[Legacy Legends, LLC]

This is why you should own TSLA! 80% TSLA and 20% speculation EV stocks if you must. TSLA must be in your portfolio first and foremost!

[Wolf Den]

@Legacy Legends, LLC no thanks, musk is a train wreck playing with his toys. Doesn't give a shit about investors

[SomeGuy14]

@Legacy Legends, LLC

TSLA is just a ludicrous version of this. $900B of insanity.

[correct way to invest]

Because it's not as good as fisker

[Stop The Printer]

@correct way to invest No idea what Fisker even is. Have they sold any cars yet?

Haven't seen any on the road.

[correct way to invest]

@Stop The Printer come out next year more reservations than rivian

[farwest]

@correct way to invest Aren't the Fisker 'reservations' simply fantasy? Thought they had dubious fly-by-night buyers making 'reservations' that required no money to change hands and no actual commitment to buy? Or was that Nikola? So many scam EV plays I lose track of the scams.

[Entreri]

I can buy a new Toyota for $20k that will run for 20 years+.

20% increase for 70k++ vehicles. These EVs are far too expensive. I was bullish at $30 for this, but no longer.

2021 outlier year for new and used vehicle sales. Gen Y and especially Gen Z, desire to own vehicles is much less. iPhones Yes, vehicles No.

[microhoo]

Because Ark's Cathy bought it?

[tb92]

RIVN has plenty of ways to fail, but this won't be one of them. They are a low volume manufacturer, and will be for a long time. If you make only a few cars, you can always find a few people for whom the price does not matter.

[DelTortuga]

@tb92 but they are burning almost 2 billion a quarter with under 11 billion in reserves. Inflation will eat that by November

[farwest]

@tb92 IF I could buy a Rivian now, I would, even with a 20% price increase. Go try buy a similar high-end vehicle and not get hit with massive dealer markup ($10K+ is common in their price range).

Heck, many dealers have almost no stock of popular vehicles - and everything is sold prior to arrival to the dealer's lot. Chip shortages make high end driving packages hard to get. BMW stopped offering touch screens on all but their highest-margin vehicles. Even a $80K X5 won't have a touch screen this year.

My issue with Rivian is with long lead times (I cancelled my reservation years ago when it became clear they'd never get close to meeting their timelines). And the worry about servicing locations. Ford/GM et al have thousands of dealers - at most, Rivian might have a few hundred. Better be near a service location or it will be a pita to own.

[tb92]

@DelTortuga Well, that would be one of the ways to fail.

[ShankaSwingTrades]

I gave all my employees a 20% raise. So this is in line with the new stimulus world.

[mrbuseco2]

Ford is going to drink this milkshake the second they release an electric F-150