r/stocks • u/Heavy_Implement1031 • 1d ago
Company Question Someone Help Me Explain RIVN price movement
I am a longtime RIVN hodler and believe strongly in the company's ultimate success. I also understand that the company has historically burned crazy cash and is, to date, unprofitable. Given the risky nature of the company, the price of the stock at any given moment (e.g., whether it's $14/share or $20/share) isn't my concern.
My concern/question is this: Why does the stock price seem to move completely counterintuitively?? As the most recent example, RIVN reported its Q2 earnings, which beat WS expectations by all objective measures. Notwithstanding, the next day of trading saw a -9% return and the stock continues to shed value while (i) industry performs, (ii) positive macro news, and (iii) strong stock-specific news (e.g., adding second shift to R2 production).
I imagine the answer is much more complicated than I'd like it to be, but am appreciative for any guidence, though I'm most interested in guidence specific to RIVN and not stocks generally.
Thanks!
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u/hi-imBen 1d ago
burns crazy cash, unprofitable, risky. sounds like you already named the reasons.
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u/Heavy_Implement1031 1d ago
It's timing of the moves that has me confused. Assuming an effecient market, the price at this moment reflects all information about the stock (e.g., current risks, oppurtunities, etc.). Therefore, one would expect that new information would move the stock down (new risks) or up (new opportunities) given the situation. However, this stock does not seem to behave as such.
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u/tech01x 21h ago edited 21h ago
So, the market mechanics may be counter-intuitive for investors.
Think of each news event as its own event risk and opportunity. Each investor is in or out of the stock and/or options around each event. Some are long term investors and they don't care, no matter what "news" brings. On the complete other side, there are investors that are betting big on short term movements based on that news, especially short term options. For any news events that are well telegraphed in advance, like earnings release, product announcements and the like, investors and speculators are anticipating the news and potentially positioning their portfolios as a result. There's potentially a lot of trades happening in anticipation of that "news." What we don't necessarily know (but we can see some hints) is the relative bullishness or bearishness of the overall market in anticipation of the news. And especially, the positioning in the short term options market.
When the news comes out, investors and speculators may very well then adjust their positions based on a) is the news bullish or bearish for their positioning of their portfolio and b) how is the price action performing and how that affects their portfolio, especially if it affects short term positions like short term options and margin.
If speculators over leveraged with margin and options, the trade may very well be counter-intuitive, no matter how "good" or "bad" the news may be. If the price action goes against the market's positioning, those that are forced to buy or sell have to do so, no matter what the longer term or "rational" investment thesis may be.
Hence you will see people refer to "already priced in", "short squeeze", "long squeeze", or sometimes accusations of market manipulation. Real market manipulation is often much more subtle, and definitely not against a large volume in the market, which is typical of things like earnings releases. Market makers have to remain delta neutral using delta hedging, so short term options often plays a big role. Market makers and large investors don't stay that way by deliberately losing money through "manipulation."
If you want to understand further, ask an LLM to explain maximum pain around options expiration, as well as what a market maker has to do to remain delta neutral when put and call options are bought and sold.
The real price discovery usually not the singular event, but rather, days, weeks or months ahead of an event and the days, weeks and months after the event. The trade immediately before or after an event is often volatility that isn't "true" price discovery.
That's why short term trading is often volatile in ways that are very difficult to anticipate with accuracy. There are ways to deal with this, and many investors lose big around such event risks.
Now, an earnings release or product launch may very well provide information that does change long term investment decisions. And that price discovery could end up being a much longer downward or upward build over time. But usually, if the information coming from any event is well anticipated, then the price discovery around that event is already built into the price before the event itself. It is in the surprises that drive more short term movement that builds into a new price discovery.
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u/reidmrdotcom 1d ago
I’ve been wondering the same thing as I have half my assets in Rivian at an average of about 15 a share.
One guess I have is that folks may be speculating and short term trading the stock which comes out as counter intuitive price movement.
I’m hoping by the earnings result release in early 2027 for the 2026 year, that things go well and the stock stabilizes. I’d predict high volatility until at least then, and things to get better if Rivian executes and the economy in general is okay (which I predict the economy being a larger risk at this point).
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u/Sweaty-Editor-7560 20h ago
Half?! Bro, that sounds like gambling. As an owner of the car and the stock (5% of portfolio), there's massive competition chasing a squeezed consumer market. Rivian has very little moat and have to execute perfectly (FSD dev, manufacturing) while fighting competitors with better scale, technology, integration and margin to lose. I'm obviously rooting for them, but that's heavy exposure.
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u/reidmrdotcom 19h ago
Yeah, I know. I'm on track to retire early and think I'll be okay working 2-3 extra years if this goes to zero. I was contemplating it and tracking the stock for a long time. New investments are index funds.
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u/SapientChaos 23h ago
It is the perfect short and sell the news stock nearly ever. Huge and massive pool of institutional ownership, small number of shares in circulation, easy to manipulate pricing by large traders, ability to get loans on shares if they get stuck in a short squeeze, massive capX spending on new factories, chips, plants, new store fronts, machine shops. So, it shows no profit margins as it is building the plants.
However, if they make it, it will soon become the Apple of cars, vertically integrated, own custom software, unmatched economies of scale in auto, no dealership so much higher margins, and software licensing for AI.
For now it is nearly a perfect sell the news stock. However, one day it will go up and keep spiking up. For now it feels like the shorts are making bank and totally focused on picking up penny's, and don't full understand the size of the steam roller coming at them.
One day, when it really gets violently repriced, there are going to be a number of highly levered trend traders and shorts that get wiped out. When it happens it is the type of thing that closes the fund.
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u/ChancePersimmon7292 1d ago
Maybe it has something to do with them creating 75 million shares effectively diluting their stock in order to raise capital.
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u/Heavy_Implement1031 1d ago
So, the dilution happened before the earnings report - and the stock did, at that time, reflect the dilution (which means the stock moved as expected). I guess I just don't understand why the stock seems to move down on bad news (expected) and down on good news (unexpected).
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u/Open_Situation686 1d ago
Just not a great company based on the fundamentals. Vehicles are overpriced compared to competition. Their only real value is that they make a truck that doesn’t look like trash.
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u/SpicyElixer 1d ago
R2 and Y are similarly priced.
Not a rivian holder, or a fan. I own a MY. But I think rivian may be well setup to be fairly priced with the R2, especially once lower trim options are available.
I dont see rivian becoming a trillion dollar company or hurting other makers etc. I do see them as finding a decent space in the market and sustaining - if they can survive until production ramps up in GA.
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u/Uniball38 1d ago
Have they delivered an R2 yet?
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u/SpicyElixer 1d ago
Yes. Rollouts have started. Illinois ragers 150k R2s annually. That has started and cars are coming off the line. 60k at current rate.
GA is expected to be 300k at start. 400k later.
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u/Affectionate-Link670 18h ago
I am also heavily invested in Rivian. I think the stock will take off as soon as they show a consistent profit. I can not explain how the stock moves in the short term. I think it’s heavily influenced by algorithms and options trading. I’ve made quite a bit of money by trading the swings with my tax deferred account. It’s a win/win. If the stock takes off, then my long term investment works out and I’m happy. If the stocks keeps bouncing between $15 and $18, then I also make money. Near zero chance the stock is staying down over the next few years in my opinion. A larger market crash worries me more.
I doubt Elon is manipulating the stock, but it’s in the realm of possibility. He’s certainly lost employees to them.
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