Why Rivian Stock Dropped Today – The Motley Fool

Returns as of 12/16/2021
Returns as of 12/16/2021
Founded in 1993 by brothers Tom and David Gardner, The Motley Fool helps millions of people attain financial freedom through our website, podcasts, books, newspaper column, radio show, and premium investing services.
Yesterday was a great day to own shares of electric start-up Rivian (NASDAQ:RIVN), with the stock revving 3.7% higher after MotorTrend named its R1T electric truck its Truck of the Year.
Today, however, Rivian’s giving back all of those gains — and more — and is down 4.2% as of 12:20 p.m. ET on litigation jitters.
Image source: Getty Images.
Specifically, Bloomberg is reporting that a California judge has ordered electric archrival Tesla (NASDAQ:TSLA) to accelerate its lawsuit against Rivian, alleging that the latter stole documents from the former. Within 30 days, Tesla must produce a list of “all the documents it claims were stolen by several employees” who left Tesla for Rivian.  
Then Rivian must tell Tesla what “steps” it took “to investigate and respond” to Tesla’s theft allegations when they were initially made back in July 2020.
On the face of it, this judicial order doesn’t actually sound like such bad news for Rivian. So why is it making Rivian investors nervous today?
Basically, what the judge’s order does is accelerate the trial process and move things closer to a day when Tesla will either win or lose its lawsuit against Rivian. On the one hand, victory over Tesla would remove a big dark cloud over Rivian’s future. But on the other hand, a loss in court could cripple Rivian at a critical time in its development, as it’s working to bring its R1T electric truck and R1S electric SUV to market and simultaneously build 100,000 electric delivery vans for Amazon.
The good news for investors, though, is that after raising $11.9 billion in its IPO last month, Rivian probably has somewhere in excess of $20 billion in cash on hand today. Granted, much of that money will of course be earmarked for expanding production to build the tens of thousands of electric vehicles it now has on order awaiting fulfillment. But even so, that leaves billions more to finance the company’s legal war with Tesla.    
When you get right down to it, Rivian’s rush to market, and investors’ enthusiastic acceptance of Rivian stock, has put Rivian in a position where Tesla cannot simply sue its rival into extinction. In my opinion, that’s a pretty good reason to be optimistic about Rivian.

Discounted offers are only available to new members. Stock Advisor will renew at the then current list price. Stock Advisor list price is $199 per year.
Stock Advisor launched in February of 2002. Returns as of 12/16/2021.
Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Making the world smarter, happier, and richer.

Market data powered by Xignite.

source

Leave a Reply

Your email address will not be published. Required fields are marked *