Rivian Stock News and Forecast: RIVN drops on recall

• RIVN stock looks set for more losses as the company recalls vehicles.
• RIVN is already an underperformer in 2022.
• Rivian does have cash of $15 billion on hand.

Rivian (RIVN) stock is set for more losses on Tuesday as the news about a recall of most of its vehicles hurts investor sentiment. Rivian is already under pressure, having fallen just under 70% year to date. This will add to pressure on the stock in all likelihood. Now it should be pointed out that recalls are common to virtually every automaker, but Rivian is a start-up and thus needs to prove itself to customers and investors. The effect is then likely more pronounced here.

Rivian stock news

Dan Ives of Wedbush made a similar observation on Monday, saying that recalls are pretty common but "the last thing any Rivian investor wants to see in a shaky market is a broad recall that hurts the brand and gives some lingering credibility issues to production going forward."

The recall is the second recall this year with an earlier issue affecting just 500 vehicles. This time the problem is more widespread, affecting nearly every vehicle Rivian has produced. It is due to an issue with the steering system. Reports say it should be easily correctable.

However, RIVN stock is down 2% in Tuesday's premarket. The EV sector overall has been struggling with rising rates and valuations that have stretched too far. Rivian stock is in a better position than many of its start-up EV competitors due to having a large cash pile. Rivian has nearly $15 billion in cash on its balance sheet. With the US 10-year yield approaching 4% again, valuations of all sectors and stocks are being revised downward, but those with high-growth ambitions are being especially hurt. 

We also have mainline auto manufacturers being hit on a downgrade note from UBS. The Swiss investment bank downgraded Ford (F) and General Motors (GM), citing concerns over demand destruction.

Rivian stock forecast

Rivian now approaches key support. The stock had been attempting to form a bottom after the huge losses suffered this year. Already though it has broken the trend line and now approaches key support at $30.92. A break of that, and then all-time lows of $19.25 would be the next support target.

Rivian stock, daily