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Rivian is one of the biggest names in the electric vehicle (EV) industry in the United States, but things haven’t been all that rosy for the company since they were first listed on the stock market about a year ago.
Despite ramping production and delivering vehicles, Rivian still seems to be at the mercy of the overall market, with a share price that looks more like a sledding hill than anything else.
Today, we are going to take a look at Rivian and uncover the possibilities of why it’s dropping so much. By the end, we’ll have a better idea of the reason that Rivian’s share price has fallen, and maybe a better understanding of it will recover. Let’s get started.
What Does Rivan Do?
Rivian is an electric automaker that is known for its dual focus on sustainability and adventure. The company was founded in 2009 by R.J. Scaringe, who had a vision of creating electric vehicles that could go off-road and handle tough terrain. Since then, Rivian has become known for its rugged and capable electric vehicles, which are designed to take drivers to remote locations without sacrificing comfort or performance.
Part of what makes Rivian unique in a market that is fast becoming saturated with new EV makers is its “skateboard” technology. Essentially, the company has created a basic building block for EVs that is referred to as a skateboard. This board contains motors, a battery pack, and most of the essentials that an EV needs, allowing them to build various vehicle types on top of the skateboard architecture. So far, the R1T and the R1S, the respective truck and SUV models, use this skateboard architecture. Additionally, Rivian has the ability to create these EV platforms for other companies, leading to higher potential revenue as more than just a vehicle maker, but as a service and essential parts provider.
The IPO and Eventual Decline of Rivian’s Stock
When Rivian was first bursting on the scene, the media and consumers were referring to their vehicles as “Tesla killers,” which signaled the end of the Tesla hegemony that the company currently holds over the U.S. EV market. When the company finally IPOed (initial public offering) and was first listed on the stock market in November of 2021, things went off with a real bang.
In fact, Rivian’s IPO was an absolute monster. In light of increasing EV purchases and a proposed deal with retail giant Amazon and automaker Ford, Rivian debuted with a massive $179.47 over the next few days… but that was about as good as things got for the company share price. Within weeks, the ATH (all-time high) that Rivian had just seen was in the rearview mirror of their R1Ts and R1Ss’ that were being shipped off.
The reason? Well, there are a few.
A Total Recall and Market Instability
The first major event to hit Rivian was a total recall of all vehicles that the company had shipped so far. As they had just started delivering, there were only 13,000 or so cars on the road, but it wasn’t a good sign. The issue was a major bolt that was coming loose in the steering column that was causing people to lose control of the wheel while driving. Having to recall every one of their cars within a month of going public wasn’t a great thing for the brand image, and the share price dropped nearly 10% within the day.
To make matters worse, December 2021 was the first real signal that things were about to get pretty nasty in the global economy, especially in the tech sector in the United States. The cheap money from the COVID-era was drying up, and for the first time in two years, the largest companies in the world started showing slipping share prices. The Fed started increasing interest rates within months, and soon, fear settled in for consumers and businesses across the United States and the world. What’s more, the Russian-Ukraine war caused supply chain issues and further destabilized the world market. For families looking to buy a new car, waiting a little longer before things “settled out” was probably a pretty reasonable option.
In the greater tech industry (EV makers are quasi-members of the tech industry, despite being automakers), things were looking especially bad. Companies like Apple, Google, and Meta all fell sharply over the next few months, with the tech-heavy NASDAQ reporting an over 30% decline in value since the start of 2022. Rivian, along with its tech brethren, slipped as well.
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Rivian’s Stock Price Today
Since the company hit its ATH of ~$180, it tumbled over 80% to the current $25 it’s sitting at today. Despite being the new kid on the block, Rivian wasn’t able to overcome the global market problems of inflation, popping tech and real-estate bubbles, and geopolitical crisis and fear. Additionally, it didn’t help that Rivian made a foolish mistake when it first went public and needed a total recall of all vehicles.
In more recent news, Rivian called off a large deal with Mercedez-Benz after deciding not to move forward with a large commercial van project. This had a slightly positive impact at first, but the overall market still took back the stock gains. Overall, if Rivian can weather the storm, many investors think that the company has a lot more to offer and will be a staple in the now and future EV wars.
Here are some key takeaways regarding Rivan and its stock price:
- Rivian had a truly massive IPO but lost most of its value within a year.
- The overall market, namely the international crisis of Russia/Ukraine, a bursting tech bubble, and consumer fear, have negatively impacted Rivian, as well as most other companies in the United States.
- Rivian had to recall all 13,000 of its vehicles after they left a screw loose in the driving column, reducing trust in the company.
- Many investors think that Rivian will eventually recover its value when the rest of the market corrects upwards in the next few years.
