Electric vehicle (EV) manufacturer Rivian (NASDAQ:RIVN) is under significant pressure as the sector suffers from credibility challenges. With EV euphoria fading, RIVN stock has slumped in sympathy with other top-tier competitors, including Tesla (NASDAQ:TSLA) and Lucid (NASDAQ:LCID).
Dominating business headlines Thursday are reports about a troubled EV maker hiring a consulting firm to assist in a possible bankruptcy filing. Inherently, such news will drag on related enterprises as investors look for any news that the fallout in the industry is exaggerated. However, several EV competitors have slumped badly in recent years, including Mullen Automotive (NASDAQ:MULN) and the once-hot Canoo (NASDAQ:GOEV).
Moreover, it’s not just RIVN stock and direct EV players that are feeling the heat. Charging infrastructure specialists such as ChargePoint (NYSE:CHPT) and Beam Global (NASDAQ:BEEM) also slipped on Thursday. Plus, their trailing 52-week performances have longstanding headwinds that go beyond one company’s financial troubles.
Likely, the culprit that explains the volatility in RIVN stock and its ilk comes down to severe pressures against the consumer economy. While the U.S. macroeconomic system has done well to recover from the Covid-19 malaise, it also cannot be ignored that the public suffered years of sustained inflation and high borrowing costs.
Essentially, something had to give and the EV space has become the victim.
Bears Attack RIVN Stock Despite Positive News
According to Fintel’s options flow screener — which exclusively focuses on big block transactions likely placed by institutions — Thursday’s action in the derivatives market shows heavy volume for long-expiry RIVN stock puts. These contracts give holders the right (but not the obligation) to sell the underlying security at the listed strike price. Notably, many of the RIVN puts feature a strike price of $10.
Such implied bearishness clashes with positive news that earlier bolstered sentiment in RIVN stock. For example, Rivian received 68,000 orders for its new R2, an SUV which features a starting price of $45,000. Slated for a 2026 launch, the excitement over the fresh model confirms heightened demand for accessible EVs.
At the same time, that also may be ironically heightening investor concerns over RIVN stock. Fundamentally, as CNBC pointed out, EV euphoria may be “dead.” Major automakers – who were previously eager to pivot to the new mobility platform – have scaled back or delayed their plans.
Even outspoken Tesla CEO Elon Musk remarked in late January that he’s bracing for what “may be a notably lower” rate of growth. Even more worrying for RIVN stock, should demand start picking up, Tesla could continue to wage its price war on competitors.
Why It Matters
At the moment, analysts rate RIVN stock as a consensus moderate buy. This assessment breaks down as 12 buys, nine holds and three sells. With the volatility this year, however, the average price target of $17.95 reflects a growth potential of over 68%.
On the date of publication, Josh Enomoto 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.
