What happened
Rivian Automotive (RIVN 2.84%) 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%.
So what
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.
Image source: Rivian Automotive.
Now what
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.
