Why Rivian Automotive and Other EV Stocks Had been Clobbered Now

December 21, 2021 Off By [email protected]_84

What occurred

Shares of numerous firms in the electric-automobile room had a difficult Monday, such as substantial-flyer Rivian Automotive (NASDAQ:RIVN). Individuals stocks were caught in the wide market place market-off activated by the swift spread of the omicron variant of COVID-19, as nicely as the delta variant spike now underway. Traders surface to have been anxious that this new wave of COVID-19 conditions could compel governments to initiate an additional spherical of protracted shutdowns.

Here is wherever these well-liked EV shares shut on Monday relative to their closing rates on Friday.

  • EVgo (NASDAQ:EVGO) — down about 5.2%.
  • Lordstown Motors (NASDAQ:Ride) — down about 8.2%.
  • Lucid Team — down about 5.1%.
  • Nikola — down about 7.3%.
  • Nio — down about 6.1%.
  • Rivian — down about 7.9%.
  • Tesla  — down about 3.5% (and just less than $900, at $899.94).
  • Workhorse Team (NASDAQ:WKHS) — down about 8.9%.

So what

Any one who has compensated focus to electrical-vehicle stocks (or any automobile market shares) because early 2020 can possibly comprehend why traders ended up involved. Pandemic-related manufacturing unit shutdowns have been interfering with car-sector offer chains for a lot of the very last two years, costing automakers billions of pounds in dropped manufacturing and revenue.

Even though some automakers lately reported bettering materials of critical factors like semiconductors, the pace with which the omicron variant is spreading has lifted fears that it may well lead to new manufacturing disruptions and additional shortages. 

Definitely, that would be a bearish catalyst for just about all of the electrical car makers on our record. The feasible exception is Tesla, which has tailored somewhat effectively to shifting situations in the chip current market this calendar year by (among other items) revamping some of its vehicles’ circuits to make use of substitute chips.

But if suppliers’ factories shut down for extended intervals, the possibility of more declines for the rest of the group is true. Consider that Rivian’s higher-flying shares have fallen sharply because it shipped its earnings report on Dec. 16, at which time it warned that it would miss its (incredibly modest) 2021 production goal simply because of specifically these varieties of offer chain issues. 

Rivian just commenced production of its R1T pickup, but it has already been hampered by provide chain challenges, it reported previous week. Image resource: Rivian.

And even though EVgo just isn’t an automaker, its stock and its fortunes will increase and tumble with those people of the electric-automobile industry as a whole. If auto generation is disrupted drastically by omicron (or upcoming COVID-19 variants), investors can hope EVgo’s shares to suffer. 

Now what

Now what without a doubt? I imagine what will come following will count on regardless of whether the omicron surge passes relatively swiftly or turns out to be deeply disruptive. More disruptions would be undesirable news for a lot of of these EV shares — but it really is really worth noting that if the market’s present fears turn out to be overblown, there could be really a rally in speculative growth stocks like these.

This write-up represents the feeling of the author, who may disagree with the “official” recommendation posture of a Motley Fool high quality advisory company. We’re motley! Questioning an investing thesis — even 1 of our personal — aids us all imagine critically about investing and make conclusions that assist us become smarter, happier, and richer.