Among the heavily hyped initial public offerings last year, Rivian Automotive (NASDAQ:RIVN) benefitted from early buzz, only to disappoint later. Still, RIVN stock isn’t completely a lost cause considering the ease of manufacturing for electric vehicles as opposed to their combustion-powered counterparts. But how reliable is this narrative?
First, let’s acknowledge that it was perfectly understandable why so many clamored for RIVN stock when it made its public market debut last November. EVs represent one of the hottest topics on social media, bolstered by the fact that millennials and Generation Z are generally more sustainability oriented than prior generations.
Second, Rivian’s product offering is enticing, featuring an electric truck and SUV for the consumer market and providing clean efficient solutions for commercial fleets. Combined with the domestic and international push to modernize transportation networks, RIVN stock seemingly had a massive opportunity for upside.
Unfortunately, the opposite has been true so far. On a year-to-date basis, RIVN stock is down around 35%. Since its first session close, the security has lost approximately 48%. It’s also down 14% below its initial offering price of $78, an ignominy for such a highly anticipated IPO.
More recently, RIVN stock suffered some volatility from the shocking geopolitical flashpoint of Russia invading Ukraine. Although this destabilizing attack doesn’t directly affect Rivian and the wider EV industry, it does nothing good for the market.
I’m not the first person to have thought this but I’ll reiterate it: Russian President Vladimir Putin made a terrible fatal error. Whatever goals he hoped to achieve should have been resolved through diplomatic, political and/or economic channels. As soon as violence is used, one loses all moral ground.
But could this incident somehow help beleaguered Rivian?
A Cyberattack Makes One Think Twice About RIVN Stock
As you know, the global community condemned Russia’s action, leading to a flurry of economic sanctions and penalties. Among the nations joining the call to restrict Russia’s ability to wage war was Japan. Although it’s speculation, it may have suffered the first of the Russian promise of retaliation.
Just recently, Toyota (NYSE:TM) announced that it will suspend all Japan-based factory operations after a suspected cyberattack. Per a CNBC report, the Japanese automaker said that it will lose around 13,000 cars of output after a possible breach affected a supplier of plastic parts and electronic components.
At the time of this writing, “Japanese Prime Minister Fumio Kishida said his government would investigate the incident and whether Russia was involved.” So, it’s not officially confirmed yet whether Russia was involved. However, it’s awfully suspicious given the circumstances.
Nevertheless, what’s bad for Toyota could be good for RIVN stock. Obviously, Toyota’s bread and butter remains its combustion cars. With those options disrupted, more people may consider EVs. That’s not to say that they’ll pick Rivian but it may enjoy an indirect tailwind.
More importantly, as an EV manufacturer, Rivian benefits from requiring fewer parts than what a combustion automaker must use. Again, this circumstance isn’t an exclusive catalyst for RIVN stock. However, the prospect of debilitating cyberattacks not just for Toyota but for all major automakers could help the EV industry.
Yes, it’s terribly cynical but at this point, RIVN stock needs all the help it can get. So, does this latest news justify taking another look at Rivian?
Frankly, I’m not sure if it’s a wise move. Rivian operates in the premium EV segment, which already features serious competition from Tesla (NASDAQ:TSLA) and Lucid Group (NASDAQ:LCID).
Nothing Fundamental Has Changed
However, the biggest reason for not making big moves on RIVN stock regarding the suspected cyberattack on Toyota is that nothing fundamental has changed about Rivian’s prospects. If you liked the company before, in the long run, the attack changes nothing. And if you didn’t like RIVN, guess what? It’s the same situation.
If it were me, I would stay on the sidelines. The outbreak of violence in Ukraine could get much worse considering that Putin, who appears to have utterly lost the plot, could escalate the bloodshed, seeing as how backing out would make him lose face.
And as an aspirational idea, RIVN stock is too risky in an environment where investors are running for cover. Again, staying away is probably the wisest idea for now.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
