What’s going on with Rivian stock

Rivian stock popped this morning, peaking at 8.1% at 10:24 a.m. ET. Before giving back some of its gains and trading up 1.8% as of close on Monday.

Today, an analyst issued a downgrade to Rivian Automotive (NASDAQ:RIVN). So naturally, you’d anticipate that the electric vehicle (EV) stock would fall, but it hasn’t.

Why we care

Exane BNP Paribas started coverage on Rivian stock, giving it an underperform rating and a price target of $35 per share. That’s 10% lower than Friday’s closing price for Rivian stock, but the market still drove the company higher.

Exane BNP Paribas sees little risk in the stock from here over the next year, which might be one reason for its rating. According to TheFly.com, Exane called Rivian “a serious brand with true staying power”. That’s significant considering Rivian’s R1T pickup truck competes against Tesla‘s (NASDAQ:TSLA) Cybertruck and General Motors‘s (NYSE:GM) GMC Hummer EV.

Pricing correction

However, Exane sees Rivian’s plan to raise vehicle pricing as evidence that the company’s initial pricing for the R1T pickup and R1S SUV was “structurally unprofitable.”

Rivian raised prices for its EVs in early March. However, they withdrew plans to raise prices for cars already reserved before March 1 due to a public outcry. On the company’s fourth-quarter earnings conference call, CEO Robert Scaringe even acknowledged that it was a mistake to bump up prices for pre-order customers already booked.

However, in its annual 10-K report filing on March 31, Rivian once again struck a nerve with investors when it mentioned the severe cost and supply constraints it was facing and the possibility of raising prices even higher shortly to offset the sharp rise in input costs. Rivian predicted that it would manufacture just 25,000 vehicles in 2022 against expectations of around 40,000 units barely weeks ago.

Now what

Why did Rivian stock rise today? It appears to be the belief of investors that if a competitor is hurting, it may help Rivian. For example, Reuters confirmed that the Tesla Gigafactory in Shanghai had been closed for two weeks.  That’s despite Tesla’s plan to reopen it within four days due to the COVID-19 lockdown.

Things could only get worse before they get better. According to the website CnEvPost, the China Passenger Car Association has reported a 20% drop in automobile manufacturing in China during the recent coronavirus outbreak. Several car companies have closed operations, including Rivian’s rival Tesla. April looks to be another difficult month.

Rave reviews

The R1T from Rivian has been receiving rave reviews since its release. The R1T, which was named Motor Trend’s 2022 Truck of the Year on April 7, was also tested against the 2022 GMC Hummer EV and labeled an “overachiever” with a kit that is “tough to beat”

Given Rivian’s losses in recent weeks, investors who searched for any reason to buy the stock discovered some today.

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