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RIVN Stock Alert: Rivian Is Plunging Despite This Key Amazon Catalyst

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It’s been a rather mixed day for electric vehicle (EV) manufacturer Rivian (NASDAQ:RIVN). Despite being down all day from yesterday’s close, RIVN stock did spike this morning, before settling back down into a loss of more than 6%.

Rivian sign outside the company's HQ in Silicon Valley

Source: Michael Vi / Shutterstock

Rivian is an interesting EV startup, and one that has raised eyebrows for its early valuation relative to its minuscule sales. Currently valued at a “modest” $53 billion, this stock is down roughly 65% from its peak. For a company that just crossed the threshold of 1,000 deliveries, that’s a hefty valuation.

Of course, stocks are valued on the basis of their forward-looking prospects. Accordingly, investors buying into Rivian right now are mostly doing so with a five- to 10-year (or longer) outlook. However, given the risk-off view investors are largely taking with stocks right now, Rivian’s underperformance is perhaps unsurprising.

In addition to this macro environment, there is a company-specific catalyst driving RIVN stock lower today. Let’s take a look at what investors are watching right now with this company.

RIVN Stock Drops on Amazon Investment

Yup, that’s right — Amazon (NASDAQ:AMZN) has added to its stake in Rivian. The e-commerce giant announced its stake in Rivian has grown to more than 18% of the company, making Amazon’s Rivian stake worth nearly $10 billion. That sure sounds like a good thing on its face.

However, as part of a U.S. Securities and Exchange Commission (SEC) notice filed yesterday, Amazon also announced a 5% stake in a different EV-related company, Aurora Innovation (NASDAQ:AUR). While not necessarily direct competitors, this is an interesting bet. Aurora Innovation focuses more on the autonomous driving technology underpinning the EV sector. Accordingly, this is a headline that investors may have otherwise cheered on a day that’s not today.

Overall, this news that Amazon is not standing pat with its investment, but loading up further, ought to be bullish for RIVN stock. Maybe it will turn out to be over time. However, for now, investors appear to be in selling mode. And RIVN’s valuation is too easy of a target right now.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.



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