November 8, 2024

Rivian Shares Fall as Tesla's Surge

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Investing

24/7 Wall St. Insights

The Tesla Inc. (NASDAQ: TSLA) share price rose by a double-digit percentage after Trump’s election victory. The primary impetus for that appeared to be the close relationship between Tesla CEO Elon Musk and the president-elect. However, it is unclear whether the new president might end up with policies that favor America’s largest electric vehicle (EV) maker. In a period in which EV sales in the United States have slowed, Tesla’s gain would create victims of the smaller companies competing with it, each battling for market share in a stagnant industry.

The day after the election, Tesla’s stock was up almost 20% and the share price of Rivian Automotive Inc. (NASDAQ: RIVN) fell as much as 8%. It recovered somewhat the next day but is still down 57% for the year, while Tesla’s surge put it up almost 20%. The S&P 500 is up 24% over the same period.

Rivian cannot afford Tesla to have an edge beyond its much larger company’s unit sales and revenue, and the market share it already has.

Rivian’s revenue fell from $1.37 billion in the most recent quarter to $874 million. Its net loss was $1.10 billion, compared to $1.63 billion last year. Rivian produced only 13,157 vehicles, and its forecast for the year is 47,000 to 49,000. CNBC reported, “Rivian lowers earnings guidance after missing Wall Street’s third-quarter expectations.”

The theory is that the new president will cut tax credits for EV buyers. On paper, that should also hurt Tesla, but investors do not think so. It appears that investors think Rivian will be a victim.

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