- Rivian stock surged over 6% on Monday as EV stocks looked to Lucid as savior.
- Nasdaq: RIVN will collapse on Tuesday as reality sets in.
- Rivian shares still look way too high in our view.
Time for a continued dose of reality for EV investors as the market continues to gyrate nervously on geopolitical events. This is not the time to be dabbling in high-growth names with little to no profits. The geopolitical backdrop is challenging with various headlines emanating from the Russia-Ukraine crisis daily. However, no clear path out of conflict currently appears evident.
All this has ramped up the negative macroeconomic backdrop for equities. We entered 2022 knowing that central banks were going to struggle with inflation, and data in January confirmed this. We assumed robust economic growth in the major economies would allow the main central banks to raise rates without causing a recession. Bets on rate rises soared and global yields moved up sharply in the first two months of 2022. This hit growth stocks hard in early 2022.
Now though the Russia-Ukraine situation has given inflation a further boost but raised the possibility of a recession in Europe and also the US. The huge bull run in equities seen since the 1990s has been helped to a large extent by the huge boost from globalization. This resulted in lower costs and huge new markets from many companies. Global trade increased markedly.
Already we have seen efforts to reduce globalization from Trump tariffs to Brexit and now to worldwide sanctions. This is making equity investing more difficult and more specific. All this means growth stocks, the darling sector of 2021, are likely to suffer as 2022 progresses. Rivian as we know is a poster child of high growth stocks. It IPO'd in November in a blaze of publicity and quickly become one of the largest automakers in the world by market cap despite not having much of any production.
Rivian Stock News
Rivian (RIVN) stock reports its earnings next week on March 10 but peer Lucid (LCID) released its earnings after the close on Monday. These earnings were frankly terrible, missing on EPS and revenue while also slashing 2022 production numbers only two months into the year. As result, Lucid stocks have fallen sharply and are likely to fall more as the week progresses. Rivian and other EV names will get dragged lower as a result. For some reason, optimism was abounding yesterday as EV stocks rallied. Lucid closed up nearly 10% so the risk-reward was always skewed to the downside. We could see a fall of 20% today for Lucid if momentum picks up. Rivian will not be able to avoid contagion effects and will also likely suffer heavy losses on Tuesday.
Rivian Stock Forecast
Keep an eye on the Moving Average Convergence Divergence (MACD) and the Relative Strength Index (RSI) here. Both are in an uptrend but will likely correct today. This could be the signal for more losses. The rally in the RSI failed to even get above 50, showing how weak Rivian stock's momentum is. Only if Rivian breaks $71 do we see any chance, but the risk-reward is firm to the downside. Any positive news regarding Russia and Ukraine would see a violent reaction, but this is likely to be short-lived. The macro environment is getting even more challenging as mentioned.
Rivian stock chart, daily