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Why Rivian Stock Dropped Friday

What happened
The stock of Rivian Automotive (NASDAQ: RIVN) dropped sharply early Friday morning. The 6.5% dip may have come in reaction to another domestic EV maker’s first-quarter report last night. Rivian shares bounced back from that drop, however, remaining down just 1% as of 11:04 a.m. ET. 
So what 
When Rivian reported its fourth-quarter and full-year 2021 results in March, it told investors it was facing rising raw material costs and supply chain pressures. It had already tried to raise product pricing, even for customers who had existing reservations for its electric pickup truck and SUV models. 
Image source: Rivian Automotive.

After facing sharp backlash, the company walked back that price increase and said it would absorb rising material costs for those who had made reservations at the prior price levels. Those raw material cost increases are likely to be brought up again next week when Rivian reports its first-quarter financial update. That’s because fellow EV start-up Lucid Group told investors last night that it will be raising prices between 10% and 12% for orders beginning in June. 

Now what
Another area of concern with these young electric car companies is how supply chain pressures have forced them to cut 2022 production guidance. Both Rivian and Lucid cut back on those estimates earlier this year. In its recent report, Lucid held its current estimate to those reduced levels. 
Rivian investors will be watching closely to see if it follows Lucid’s lead or makes a change to its guidance when it reports on its first quarter on May 11, after the market close. Concerns related to supply chain and cost headwinds have already resulted in Rivian shares declining 50% in the last three months. If it seems it has those issues under control next week, some investors might believe the stock has fallen far enough and is at a good entry point.

Howard Smith has positions in Lucid Group, Inc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. –

What happened

The stock of Rivian Automotive (NASDAQ: RIVN) dropped sharply early Friday morning. The 6.5% dip may have come in reaction to another domestic EV maker’s first-quarter report last night. Rivian shares bounced back from that drop, however, remaining down just 1% as of 11:04 a.m. ET. 

So what 

When Rivian reported its fourth-quarter and full-year 2021 results in March, it told investors it was facing rising raw material costs and supply chain pressures. It had already tried to raise product pricing, even for customers who had existing reservations for its electric pickup truck and SUV models. 

Image source: Rivian Automotive.

After facing sharp backlash, the company walked back that price increase and said it would absorb rising material costs for those who had made reservations at the prior price levels. Those raw material cost increases are likely to be brought up again next week when Rivian reports its first-quarter financial update. That’s because fellow EV start-up Lucid Group told investors last night that it will be raising prices between 10% and 12% for orders beginning in June. 

Now what

Another area of concern with these young electric car companies is how supply chain pressures have forced them to cut 2022 production guidance. Both Rivian and Lucid cut back on those estimates earlier this year. In its recent report, Lucid held its current estimate to those reduced levels. 

Rivian investors will be watching closely to see if it follows Lucid’s lead or makes a change to its guidance when it reports on its first quarter on May 11, after the market close. Concerns related to supply chain and cost headwinds have already resulted in Rivian shares declining 50% in the last three months. If it seems it has those issues under control next week, some investors might believe the stock has fallen far enough and is at a good entry point.

Howard Smith has positions in Lucid Group, Inc. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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