Why Is Rivian (RIVN) Stock Down Today?

Shares of Rivian (NASDAQ:RIVN) stock closed down 5% today amid general market weakness in the Nasdaq 100. However, that isn’t the only factor sending Rivian lower.

Rivian sign outside the company's HQ in Silicon Valley
Source: Michael Vi / Shutterstock

The news? Yesterday, Rivian announced that it would be increasing the prices for its electric vehicles (EVs) with a quad-motor and large battery pack by as much as $20,000. This price change affected both the R1T and R1S models. Rivian attributed the price hikes to “inflationary pressure, increasing component costs, and unprecedented supply chain shortages and delays for parts (including semiconductor chips).”

Here’s what else investors in RIVN stock should know.

RIVN Stock: Why Is Rivian Down Today?

On top of the price hike itself, there’s another detail making matters worse for RIVN stock. Specifically, the company announced that customers who submitted a preorder prior to the hike would still have to pay the higher price. Logically, this move enraged customers. Many stated they would cancel their orders. Some even accused Rivian of engaging in a “gigantic bait and switch” tactic.

Fortunately, the company decided to do the right thing and revert its price hike for customers who had previously placed a preorder. In a statement released by CEO RJ Scaringe this morning, the executive admitted that Rivian had “made a mistake in how we approached our pricing changes.” The CEO also said that the hike was “wrong” and apologized to shareholders for breaking their trust in the company

Scaringe explained to customers that anyone who had made a preorder prior to March 1 would only have to pay the original price. The CEO added that anyone who cancelled their preorder on or after March 1 would be eligible to have their preorder reinstated at the original price.

That said, the price hike will still be applicable for all future orders. Scaringe noted that the price of a new vehicle has risen by over 30% since 2018. The costs of EV components ranging from “semiconductors to sheet metal to seats” have also gone up.

What’s Next for Rivian?

In other EV news, Rivian competitor Lucid (NASDAQ:LCID) reported disappointing earnings this week. The company disclosed “extraordinary supply chain and logistics challenges.” What’s more, Lucid lowered its 2022 production guidance to between 12,000 and 14,000 vehicles from 20,000 vehicles previously. Now, investors are worried that Rivian and RIVN stock may be hurt by the same issues.

Rivian has confirmed that it will report fourth-quarter earnings on March 10.

On the date of publication, Eddie Pan did not hold (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.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

Article printed from InvestorPlace Media, https://investorplace.com/2022/03/why-is-rivian-rivn-stock-down-today/.

©2022 InvestorPlace Media, LLC