Rivian Stock Is Still Dropping Despite CEO Backtrack, Here’s What’s Next

Trade Rivian Stock Your Capital Is At Risk
Ollie Martin
Updated: 4 Mar 2022

Key points:

  • Rivian CEO backs out of pricing changes following public uproar /li>
  • Pre-order pricing will be honoured, but changes to future orders will remain
  • CEO outlines the error as the “most painful mistake” in Rivian history
  • RIVN stock is down over 50% in 2022, can things change following next weeks earnings?

Yesterday, Rivian (NASDAQ: RIVN) CEO RJ Scaringe issued a critical public announcement. Following a vicious uproar regarding pricing changes for forthcoming Rivian models, the company made a quick u-turn in a bid to revoke any toxic opinion, and avoid potentially catastrophic cancellations ahead of the company’s earnings next week.

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The apology wasn’t enough to stop a sell-off in RIVN; with the market closing at a 4.9% loss. Without the sudden backtrack, Rivian could have faced a complete upheaval in consumer trust, as well as inflicting a permanent stain on the company’s public image. 

So what’s next for the company? Prices will continue to increase for new orders; as an unavoidable reaction to inflationary pressures weighing on the automobile industry. Everything from semiconductors to seats is becoming more expensive, hence increased vehicle prices shouldn't be much of a surprise.

Moving forward, it’s safe to say that Rivian avoided a chasm of damaging public opinion by revoking the price updates for already ordered vehicles, with CEO RJ Scaringe outlining the error as “the most painful” mistake since embarking on the Rivian journey 12 years ago. 

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Rivian has made numerous mistakes as an emerging brand, and navigating the fragile landscape of EV mobility may be more problematic than initially conceived. RIVN stock has depreciated over 50% since the start of 2022 as IPO hype dwindles, deliveries remain distant and retail traders begin to lose faith in the face of supply chain issues and a tightening market.

Analysts are also cutting targets following the pricing debacle. Baird today slashed its target by ⅓ today, from $150 to $100; citing the damaging misstep but remaining faithful in management to drive the vision of EV mobility. 

RIVN currently trades as a premarket loss of 0.7%, edging lower on yesterday's close. If the company managed to avoid cancellations with the backtrack in pricing changes, it will be interesting to see how the market reacts to the upcoming earning on March 10th.

Should pre-orders remain intact, Rivian still has a chance to surprise sellers. On the flip side, current supply chain issues and broader industry cutbacks of vehicle deliveries may also play a part in tightening initial projections. 

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