- Rivian shares fell more than 20% on Monday in a market sell-off.
- Ford will sell 8 million shares of RIVN.
- Unconfirmed rumors that Amazon is also selling Rivian.
Rivian (RIVN) has a number of events noted this week and none appear to be particularly beneficial to the stock price. RIVN stock cratered more than 20% on Monday in a market meltdown that saw the Nasdaq shed 4% while the S&P 500 lost 3%. Growth stocks and pandemic favorites again took the brunt of the sell-off. RIVN stock closed down 21% at $22.78.
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Rivian went public late last year in November at $78 and traded as high as $179.45 a few days later. We have repeatedly warned that the valuation makes no sense to our readers and continue to remain bearish on the stock.
Rivian stock news: Who is selling RIVN shares?
Rivian will release its results after Wednesday’s close. Earnings per share are expected to reach -$1.44 and revenue is expected to reach $130.5 million. These numbers will not be what is important in the earnings call. The cash burn rate and production schedule will be much larger. The conference call should address supply chain issues and provide assurance that supplies are in order and can be continued. Note also the production target of 25,000 vehicles. Any reduction in this figure will lead to a sharp drop in RIVN stock.
Also noteworthy is the news reported by CNBC on Monday that blocks of Rivian are to be sold this week when the lockout period expires. Most stocks are subject to a lock-up period after an IPO. This means that top investors cannot quickly flip their shares. The traditional blocking period is 180 days and this week saw that period expire for Rivian. Up to 800 million shares could be available for sale after the lock-up period. CNBC reports that Ford and another anonymous investor are preparing to sell a decent amount of stock. Ford is expected to sell 8 million shares of its 102 million holdings. CNBC quoted sources as saying Ford hired Goldman Sachs for the stock sale.
CNBC also said another investor had hired JPMorgan to sell a block of Rivian shares on his behalf. The report says the block for sale will be 13-15 million shares. Naturally, speculation has mounted that it could be tied to Amazon which has a stake in Rivian. There are other holders who can of course also sell, but we will have to wait for SEC filings to see what happened. So far it’s just speculation.
Rivian (RIVN) Stock Forecast: Technicals and Fundamentals Align for More Bearish Action
Since the lock-up period has expired, this will add to the negative sentiment on RIVN shares. Although nothing can be negotiated, it always creates uncertainty. High-growth names have fallen out of favor and now valuations are falling dramatically, perhaps back to more acceptable levels. RIVN stock is down 85% from post-IPO highs and it still looks too high in our view.
Macro events dominate the markets. Witness the 90%+ days of downtime we had Thursday and now Monday. 90% of down days mean stock-specific information is ignored and general panic selling ensues. It’s not done yet. In such a situation, the flight to quality is obvious. Witness the surge of the US dollar and the stability of gold. The flight to quality also occurs in the stock market during times of stress. Value stocks and cash-rich companies will outperform those that consume cash and need capital.
Rivian is burning a lot of cash, its capital position is strong after its IPO, but it is still essentially a start-up.
From a technical point of view, there is not much to add. Clearly, RIVN stock is strongly bearish with a series of lows and lower highs. The RSI and MFI are not oversold, which leaves more room for downside. We expect earnings to be disappointing. All the way up at $53.64 is the bearish pivot, RIVN stock remains bearish below this level. $29.49 is immediate resistance, above which RIVN is neutral.
RIVN stock chart, 8 p.m.
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