Shares of Rivian (NASDAQ:RIVN) were down more than 6% at one point on Wednesday. However, RIVN stock has erased all of those losses and then some going into afternoon trading. It’s up almost 2% in afternoon trading despite reports of new Rivian layoffs initially causing a decline.
That said, it’s been a very volatile stretch for the electric vehicle (EV) maker.
RIVN stock has closed higher or lower by more than 7.5% in each of the prior three trading sessions. It rallied 17% on Friday and closed higher by 8.3%, then fell 9% on Monday. Yesterday, shares climbed 7.54% on the day.
Today’s focus for Rivian comes after a headcount reduction. The company will reportedly cut about 6% of its workforce. This comes at a time of growing uncertainty in the economy.
Rivian joins a long, long list of companies that have been reducing their workforce. While that has been the case over the last few months, it has certainly been the case so far in January. Concerns over a weakening economy have companies and consumers taking a more cautious route.
According to CEO RJ Scaringe via a company-wide email: “We must focus our resources on ramp and our path to profitability.”
How Price Wars Are Impacting RIVN Stock, Rivian Layoffs
The Rivian layoffs come as the company looks to reduce its expenses and slow its cash burn. While it wants to churn out production (like any automaker), it has to contend with margin pressure too.
As Ford (NYSE:F), Tesla (NASDAQ:TSLA) and others continue to slash prices on their EVs, it makes it hard for companies like Rivian to compete.
Tesla, Lucid (NASDAQ:LCID) and others have really shaken up the EV space lately. Tesla’s pummeling sure didn’t help sentiment, as the stock endured a drawn-out correction. Shares fell in five straight months coming into 2023, falling more than 60% in the process.
However, the stock has been on fire the last few weeks, roaring off the lows near $100 and recently hitting a high of $180.68. Takeover speculation in Lucid also helped drive the EV narrative higher.
All of this has manifested in a nice pop for RIVN stock. Shares bottomed at $15.28 on Jan. 20. In just a few weeks, the stock is currently up 30% from those lows.
How it will resolve going forward is a bit harder to protect. We’ll hear from Ford when it reports earnings on Thursday evening. However, we’ve already received good results from General Motors (NYSE:GM) and Tesla.
More price cuts in the EV industry and a weakening economy won’t bode well for Rivian stock, but for now, investors are trying to focus on the positives. That’s especially true as shares suffered a peak-to-trough decline of 91.5% and are still 88.9% off the all-time high.
On the date of publication, Bret Kenwell held a long position in TSLA. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.