What happened
Shares of electric vehicle (EV) manufacturer Rivian (RIVN -3.62%) sank in Friday morning trading. As of 12:22 p.m. ET, shares were down by about 7.5%. At that time, the tech-heavy Nasdaq Composite was down by 2.3%.
So what
A number of factors were working against Rivian's shares. One is that the broader market was falling Friday. On down days on Wall Street, it's not surprising to see high-volatility stocks like Rivian moving lower.
The price of West Texas Intermediate crude oil was down by about 3% to $86.06, and since gasoline-powered vehicles are the direct competitors to EVs, that's incrementally bad news for any EV company.
Also on the macroeconomic front, a survey from the University of Michigan showed that consumers expect that inflation a year from now will be 5.1%, up from a previous forecast of 4.7%. The Federal Reserve is raising interest rates in order to reduce inflation, but investors are worried that it will have to keep boosting rates in 2023, increasing the risk of a recession.
Now what
The company-specific challenges for Rivian will be much more about increasing production and driving more demand for its vehicles. Higher interest rates will be a headwind for most consumers buying vehicles, but that's something every automaker will have to deal with.
The degree of volatility Rivian's shares were displaying Friday should be seen as fairly normal for this company. What will be more important for investors is the company's upcoming earnings report, which will be released after the market closes on Nov. 9. At that time, we'll also get an update on fourth-quarter production and the current backlog of demand -- metrics that will matter much more than one day's worth of speculative trading moves.
