Rivian stock was down this morning despite no apparent news. Instead, investors may respond to news that Tesla, another electric car manufacturer, produced fewer units than expected in the third quarter.
Rivian (NASDAQ:RIVN) shareholders saw Tesla’s most recent car production and delivery data as a worrying indicator for other EV businesses since this is a common practice among EV investors.
Consequently, Rivian’s stock dropped as high as 5.8 percent today and was down 4.2 percent at 11:15 a.m. ET.
What’s the Reason?
Tesla said over the weekend that it had delivered a record 343,830 cars in the third quarter (ending on September 30), an increase of 42% year over year but lower than the average expectation of 364,660 deliveries among industry experts.
The number of vehicles manufactured during the quarter was 365,923, an increase of 54% over the same period last year.
In a news statement, Tesla said it is “getting tougher to acquire car shipping capacity and at a fair cost during these peak logistical weeks.” Because of this, some investors may be wary that Rivian might also have difficulties in shipping and logistics.
The opinions of Wedbush Securities analyst Dan Ives, published by Reuters, may also have been viewed by Rivian stock shareholders. Ives said that recent Tesla production and delivery data might indicate demand issues, adding, “There is a black cloud over the auto industry.”
Due to supply chain challenges and growing inflation, the automobile industry, and EV manufacturers, in particular, have been plagued with increased material prices. Due to the economic uncertainties, many investors have abandoned high-risk EV stocks.
The reality that investors are now losing faith in EV stocks cannot be ignored. Rivian stock has dropped by 68% since the firm went public in November 2021.
And it’s possible that Rivian stock investors won’t see a rise in their stock price soon. The Federal Reserve remains committed to increasing rates to reduce inflation, which is now at a 40-year high in the United States.
Short-term EV sales may be impacted by rising car costs, higher interest rates due to inflation, and increased worry of a worldwide economic downturn.
That doesn’t rule out the possibility that Rivian stock is a viable long-term investment; nevertheless, investors will need to be patient.
Investors in Rivian stock are concerned that the firm may suffer due to the challenging economic climate.
Featured Image – Unsplash © Stephen Leonardi