Why Rivian and Palantir Are Falling in Monday's Stock Market Drop

Investors are dealing with a change in the mood of the market that many have never seen before. For years, the mentality on Wall Street has been that when share prices dip, it’s a good time to buy. However, that approach hasn’t delivered the quick payoff that it did throughout much of the 2010s, and that’s leaving many market participants uncertain about what to do. That has helped contribute to ongoing losses in major market benchmarks that continued Monday morning. As of 7:30 a.m., futures on the Dow Jones Industrial Average (^DJI 0.00%) were down 541 points to 32,268. S&P 500 (^GSPC -0.57%) futures had dropped 82 points to 4,038, while Nasdaq Composite (^IXIC 0.00%) futures had fallen 312 points to 12,384.

A couple of individual stocks stood out with even larger declines than the overall market. The drop in shares of EV specialist Rivian Automotive (RIVN -6.25%) had little to do with fundamental business performance, but they nevertheless hit shareholders hard. Meanwhile, Palantir Technologies (PLTR -6.32%) reported its latest financial results, and its investors didn’t find everything they wanted to see in the report. You’ll learn more about both companies below.

Selling pressure on Rivian?

Shares of Rivian Automotive were down almost 16% in premarket trading on Monday. The news came as ordinary investors pondered what those who got in on the ground floor to invest in the electric truck specialist might do with their shares.

Image source: Rivian Automotive.

Rivian had its initial public offering (IPO) in November 2021, and among its early investors were Amazon and Ford Motor Company, both of which took double-digit percentage stakes in the company. As often happens with IPOs, these and other early investors were subject to lockup provisions that prevented them from immediately selling shares once Rivian went public.

However, that six-month lockup period expired over the weekend, and reports have surfaced that Ford immediately sought to sell about 8 million shares out of the more than 100 million Rivian shares it owns. With such large blocks of stock, it’s typical that investment bankers require sellers to accept a discount, and that’s apparently the case here. It’s also possible that Ford isn’t the only major seller of shares, especially given the further downward pressure on the stock.

Rivian’s rise and fall has been painful for shareholders, and it has had impacts on the financial results that Ford and Amazon have posted since the IPO. If current major investors are truly divesting parts of their stakes at current levels, it calls into question their conviction concerning Rivian’s ability to stand out from its competition.

Palantir deals with disappointment

Meanwhile, shares of Palantir Technologies were down 13% in premarket trading Monday morning. The data analytics company reported its latest financial results before the market opened, and investors weren’t satisfied with what they saw.

Palantir’s results for the first quarter still showed considerable growth. Revenue overall rose 31% year over year to $446 million, with sales from the commercial side of its business soaring 54% from year-ago levels. Government-related revenue was up only 16% from where it was 12 months ago, but Palantir has seen a big influx of clients, as customer counts grew 86%.

From a bottom-line standpoint, though, Palantir remained in low gear. The company lost $101 million for the quarter, or $0.05 per share, and even after accounting for extraordinary items, adjusted earnings were just $0.02 per share.

Palantir’s stock has gotten caught up in the downdraft in high-growth technology stocks generally, and today’s move only added to the negative sentiment about the stock. Despite the potential for further growth in the future, investors are focusing more on short-term factors in driving share prices lower once again for Palantir.