Rivian Automotive (NASDAQ:RIVN) stock is down 15% from its Oct. 7 opening price after announcing a recall of nearly all the electric vehicles built so far. Shares of RIVN stock opened today at about $31.
The issue is a steering knuckle fastener, a bolt connecting a front wheel to the steering system. It may not have been sufficiently tightened. Rivian said just 1% of its cars have the flaw, but all were recalled “out of an abundance of caution.”
The Fall of Rivian
At one point, Rivian was worth more than General Motors (NYSE:GM) or Ford Motor (NYSE:F). Its designs for full-size electric pick-ups and sedans were seen as practical for American roads. Rivian’s plans for greenfield manufacturing plants — and freedom from winding-down gas powered motor production — were seen as big market advantages.
But Rivian stock is now down 70% on the year. The latest plunge still leaves it 10% above its mid-May low, which came just after it won $1.5 billion in tax breaks to build a new $5 billion plant in Georgia.
Some of those breaks were tossed by a state judge early this month, and the company’s direct sales model is also under challenge there. The incentive deal remains controversial.
Past stock sales, however, still have Rivian flush with cash, almost $15 billion worth at the end of June. The market cap is still over $33 billion on expected 2022 sales of $1.8 billion, but sales numbers are expected to ramp up quickly as manufacturing scales.
What Happens Next?
Rivian said the fault takes just a few minutes to check and fix, and the recall will be done in 30 days with customer cooperation.
Traders at Stocktwits expect the stock to approach its May lows, given the current bear market, before it can recover. Bulls say the bears are upset about the need to tighten a couple of bolts and will look for a new entry point.
On the date of publication, Dana Blankenhorn 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.