HomeBusinessRivian Stock plummeted after the election. Is it a buying opportunity?

Rivian Stock plummeted after the election. Is it a buying opportunity?

It’s proving to be a busy day on the stock market after the election results come in. Donald Trump’s re-election is causing stocks in some sectors to rise and others to fall. But the electric vehicle (EV) sector looks a little more nuanced.

During the start-up of the EV Rivian car industry (NASDAQ: RIVN) shares fell about 9% in late morning trading, shares in sector leaders Tesla was up about 13%. Today’s drop in Rivian shares has left the stock down nearly 60% so far this year. Exploring the various cross-flows between the EV names could be useful and potentially profitable for investors.

Start your morning smarter! Wake up with Breakfast news in your inbox every market day. Register for free »

It’s no secret that Tesla CEO Elon Musk was a big supporter of Donald Trump. However, Trump could try to change the existing rules that determine whether EV buyers qualify for an existing $7,500 tax credit, or move to eliminate such a credit. That would apparently hurt electric car sales.

See also  3 No-Brainer Warren Buffett Stocks to Buy Now

Investors think this could still be good for Tesla as it is already very profitable. It could push its unprofitable competitors out of the market, limiting competition. Rivian is of course not yet profitable. That partly explains the current market reaction.

But Rivian’s trucks were usually not eligible for the existing tax credit due to their high list prices. Where it could have a big impact, however, is in Rivian’s upcoming lower-priced R2 and R3 platforms. The company expects a higher sales volume with the new models that will be released in 2026 and 2027 respectively.

Rivian should already have enough capital to get to the point where it starts selling the new models. Efforts are also underway to reduce production costs. Any change in government policy may not have as negative an impact on the company as investors seem to believe today. With shares near all-time lows, buying Rivian stock may be a risk some investors are willing to take.

See also  How bad is this news for Super Micro Computer?

Rivian will release its third quarter update tomorrow. Investors should look at management’s view on whether they see meaningful headwinds coming or not.

Consider the following before purchasing shares in Rivian Automotive:

The Motley Fool stock advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and Rivian Automotive wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.

- Advertisement -
RELATED ARTICLES

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Most Popular

Recent Comments