Rivian Automotive (RIVN 0.27%) shares have had a volatile week so far, and today's stock moves mirrored that action. Rivian shares jumped as much 2% before a sharp drop to be down 2.4%. As of 2:15 p.m. ET, the stock had recovered most of that, remaining down by just 0.5%.
Rivian stock has had crosscurrents all week since it announced a recall of nearly all of its production vehicles on Monday. That led to a double-digit drop, even though the problem was a potentially loose fastener that could affect the steering column on only about 1% of the recalled electric vehicles (EVs).
Investors felt the EV start-up's reputation may have been damaged, though. Today's drop came after news that fellow early-stage EV company Lucid Group also has initiated a recall of 571 of its vehicles. That added to questions of credibility among these young EV companies. But investors may have had second thoughts looking at Rivian's long-term potential, especially after Lucid just joined Rivian in reaffirming its production target for the full year.
Rivian's recall of about 12,200 EVs could be in investors' rearview mirror soon, and shouldn't have a long-term impact on the company. And Rivian is setting itself up for some long-term success. Besides the consumer market for its pickup truck and SUV, Rivian also has a large customer in Amazon for its electric delivery vehicles. Amazon is also looking to invest about $1 billion to electrify its European fleet, according to a report by The Verge.
It's not just Rivian's existing relationship with Amazon that could make investors believe it could be involved in supplying Amazon in Europe. Rivian already has announced a partnership with the Mercedes-Benz Van division for a new joint venture to manufacture electric vans in Europe. It's therefore not a stretch to think that Rivian could supply Amazon there at some point in the future, too.
Investors with a long time horizon, and enough tolerance for risk and volatility, can likely overlook this week's recall news and see plenty of potential for the company. However, today's up-and-down move in the stock is what one can likely expect for a while.