Rivian (NASDAQ:RIVN) is one of the more disappointing performers in today’s market. Currently down more than 10%, RIVN stock is getting absolutely hammered.
Of course, Rivian isn’t the only company on the chopping block right now. Investors are clearly in selling mode, with most major indices down significantly this afternoon. That said, electric vehicle (EV) makers such as Rivian are seeing some of the most violent downside moves. Much of this appears to be driven by macro forces.
As most investors know, the Federal Reserve is on a mission to bring down inflation by any means necessary. That requires the use of tools aimed at cooling demand across the broader economy. Because the Fed can’t solve supply-chain issues, destroying demand is priority number one to bring prices down. For luxury automakers like Rivian, that’s not a good thing. After all, the number of people that can afford a $70,000 pickup truck is limited.
Accordingly, recent hot consumer price index (CPI) and producer price index (PPI) data has signaled that the Fed will likely continue its jumbo rate hikes through the rest of 2022. Today, some additional data was also provided to the Fed, signaling more potential pain ahead.
Let’s dive into what investors are watching today.
Why Is RIVN Stock Down?
Today’s release of consumer survey data from the University of Michigan suggests that inflation expectations could become embedded in the minds of consumers. For the Fed, this is a key negative factor. It also suggests that more may need to be done up-front to ensure inflation doesn’t become embedded.
Broadly speaking, these factors don’t have anything to do with Rivian. Most stocks in the market appear to be falling on the same news. Accordingly, it’s likely to be a macro-driven market until proven otherwise.
For Rivian, perhaps the only way out of this mess is to outperform expectations in terms of production and guidance. These are areas the company has stumbled in in the past. But if Rivian can manage through this lower-demand environment in a positive way, RIVN stock could have some impressive upside from here. The question is how low the stock will go before it eventually rebounds.
On the date of publication, Chris MacDonald 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.
