Rivian Stock Warning: Could the EV Startup Really Go Bankrupt?

  • Today, Rivian (RIVN) is seeing significant buying interest in the market.
  • This stock is up more than 6% following positive sentiment heading into this FOMC meeting.
  • Today's price action is a divergence from poor performance tied to execution-related issues.
Rivian stock - Rivian Stock Warning: Could the EV Startup Really Go Bankrupt?

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Today, Rivian (NASDAQ:RIVN) stock is one of the most-watched tickers in the EV sector. This has been the case for some time, with many prominent figures in the sector, including Elon Musk, suggesting the road ahead may be a bumpy one for Rivian. In Elon’s words, Rivian could be “tracking toward bankruptcy.”

This sentiment has spilled into Rivian’s performance over the past week. Indeed, Rivain stock has continued to take a beating, and these sorts of worries are already present in many investors’ minds.

However, additional news yesterday that Rivian may delay its highly-anticipated R1S SUV by one to nine months is even more concerning to investors.

That’s a lot of bearish news to take in. However, Rivian stock isn’t performing badly at all today. Currently, shares of RIVN stock have appreciated more than 6% at the time of writing. This move comes on a highly-anticipated Federal Open Market Committee (FOMC) rate hike decision.

Let’s dive into what to make of Rivian at these levels.

Rivian Stock: Buy, Hold, or Sell?

Rivian is in a fight against much larger EV producers, which have significant traction and consumer bases in this sector. For this company, ramping up quickly is becoming increasingly important, as equity markets remain relatively closed to new financings.

Thus, it’s hard to look favorably upon Rivian’s execution thus far. Sure, the company has a product consumers want. However, with interest rates (and auto loan rates) rising, the longer Rivian takes to launch its vehicles, the worse the outlook for this company.

These factors make today’s move higher a bit puzzling. The market has taken a turn higher, on higher interest rates, as the Federal Reserve looks to battle inflation. Less inflation is better for consumers, and companies. Accordingly, perhaps the outlook isn’t as bad as it was yesterday for Rivian.

This higher interest rate environment doesn’t solve all of Rivian’s problems. Indeed, how the company executes from here will be closely watched by investors.

That said, investors clearly are looking for reasons to get bullish. Let’s see whether today’s rally can be sustained.

On the date of publication, Chris MacDonald 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.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.


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