Rivian Automotive (RIVN 4.62%) stock got pummeled on Thursday and was trading down 9.4% as of 12:40 p.m. ET. These are challenging times to be a Rivian investor: Growth stocks were battered today, just as Rivian's quarterly earnings release and a key date that could fire up volatility in the electric vehicle (EV) stock near.
Chances are, you'll see red on most stock prices you look at today. The broader market is plunging on fears of persistently high inflation and slower economic growth now that the Federal Reserve has hinted that it may not increase interest rates as much as anticipated. A slow economy doesn't bode well for companies like Rivian that are just getting started in a high-growth industry like electric vehicles.
The selling pressure is only fueling investors' fears in Rivian as the company approaches two crucial dates.
On May 9, the 180-day initial public offering (IPO) lockup period for early investors in Rivian will expire. As the IPO lockup expiry will allow insiders to sell their stake in Rivian, the market is rightfully feeling nervous about Rivian stock.
To be clear, it's not necessary that insiders will sell shares. Yet the market fears the worst especially after two of Rivian's largest shareholders, auto giant Ford Motor Company and e-commerce behemoth Amazon recently reported massive losses for their respective last quarters after the value of their investment in Rivian plunged alongside the stock's price. Many believe these two companies would want to get rid of the Rivian overhang.
Expectations from Rivian's upcoming first-quarter earnings report on May 11 aren't encouraging either. Of late, Rivian has repeatedly warned about rising cost and supply pressures, so much so that it even said it could have produced 50,000 vehicles this year in the absence of supply chain challenges. Instead, the EV maker expects to build only 25,000 vehicles in 2022.
Rivian investors saw a silver lining earlier this week when the state of Georgia said it would give Rivian $1.5 billion in incentives and tax breaks for building a $5 billion manufacturing plant in the state. Although the incentive package comes with riders, it's a relief as Rivian's Georgia plans had run into opposition from residents. Investors believe the agreement should help Rivian speed up construction of the plant that will also be Rivian's second manufacturing facility.
The euphoria was short-lived, though, as earnings and macroeconomic jitters are making investors in Rivian cautious.