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December 25, 2024

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Rivian (RIVN) shares fall over 19% and there is more room to the downside!

Electric vehicle maker Rivian Automotive took investors by surprise when the company announced a plan to offer $1.5 billion in convertible notes. At time of writing, the stock is down over 19% on this news.

Rivian plans to offer $1.5 billion worth of senior, unsecured “green” convertible notes due in 2030. Buyers will have the option to purchase up to an additional $225 million worth of notes

In a recent regulatory report, Rivian said it expects its third-quarter revenue to come in between $1.29 billion and $1.33 billion, which is roughly in line with Wall Street estimates of $1.3 billion. In the same preliminary Q3 estimate report, Rivian estimated that it had cash and equivalents of $9.1 billion as of September 30th 2023. This is down $10.2 billion at the end of Q2. Rivian will report its Q3 earnings after the US stock market closes on November 7th 2023. Earlier this week, Rivian reported that its third quarter deliveries were better than Wall Street expectations.

Earlier this year, Rivian took steps to reduce spending and strengthen its balance sheet. This included a 6% staff reduction and $1.3 billion sale of convertible notes in March 2023. Rivian also delayed the launch of its smaller R2 vehicle platform to 2026 from 2025.

In other EV maker news, Lucid launched a cheaper version of its Air electric luxury sedan as a way to increase demand. The stock did not react positively falling with the stock down over 8% on the news.

Lucid said it will now offer a single-motor, rear-wheel-drive version of its Air Pure sedan starting at $77,400 with 410 miles of range. That’s $5,000 lower than its previous lowest-cost model, the dual-motor all-wheel-drive version of the Air Pure, which is still available. The new rear-wheel-drive version of the Air Pure is the first Lucid offering to start below $80,000.

Price for the consumer is definitely important considering the rise in borrowing costs due to rising interest rates, as well as rivals such as Tesla cutting prices over the past months.

TradingView Chart

Taking a look at Rivian shares, the stock is currently testing a major support zone around $20. You can see we have dropped below my blue support line, but the daily candle wick is showing that some buyers are stepping in intraday. How the daily candle closes will be important in determining the stocks next move.

If buyers step in and force a close back above $19.70 by the end of the day, a breakdown would be averted. However, if the sellers win out and we see a red candle close confirmed by the end of the day below this support zone, then we have a breakdown. A breakdown would mean more lows taking the stock down to the next support zone at $16. A possible further 17-18% decline.

This could also be compounded with the recent stock market weakness.

TradingView Chart

Meanwhile Lucid is testing a major support level at the $5.00 zone. The stock recently printed record lows hitting $4.97. If buyers do not step in here, the stock is poised to print new all time record lows. For bulls, a close above $5.75 would be a bullish trigger as it would break above the downtrend line.

 

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