Electric vehicle (EV) sales are rising. In 2021, 6.6 million EVs were sold worldwide, nearly double the sales in 2020. EV Volumes, a data base, estimates 2022 global EV sales at 10.6 million, up nearly 60% from 2021. More than 16.5 million electric cars and trucks were on the road in 2021.

Despite such encouraging growth in sales, EV makers' stocks have continued to falter in 2022. Let's see why that was so, and if the stocks look attractive for 2023 after the steep declines.

Top EV stocks fell steeply in 2022

U.S. stock markets have corrected significantly so far this year. The S&P 500 is down 17%, while the Nasdaq Composite has fallen more than 28% as of this writing. Since growth stocks typically trade at high multiples, they tend to fall harder during market corrections. This has certainly been true in 2022.   

TSLA data by YCharts..

While Tesla (NASDAQ: TSLA) stock has fallen 49%, Lucid (NASDAQ: LCID), Rivian (NASDAQ: RIVN), and Nio (NYSE: NIO) have fallen more than 60% year to date. And all four stocks have fallen far more from their all-time high prices; while Tesla stock has dropped more than 55% from its peak, the others are down more than 80% from theirs.

Is the correction justified, or is there a buying opportunity?

In early 2021, the valuations of EV stocks went through the roof thanks to the hype surrounding electric vehicles. As the broader markets corrected, EV stocks fell, too. And supply chain challenges have hurt the production of EV companies while raising their costs. But has the recent decline finally made these stocks attractive?

For sure, the EV story is just getting started. All these companies have a long growth runway as the transition from internal-combustion vehicles to EVs unfolds. While it is broadly accepted that this transition is inevitable, what isn't as clear is which players will thrive in the long run.

Tesla continues to post solid performance

Tesla's stock seems to have fallen to an attractive level. While it is difficult to determine whether it'll fall further in the short term, the stock is intriguing for several reasons. To begin with, its valuation is far more sensible than it has been in the past.

TSLA PS Ratio data by YCharts.

Tesla's price-to-sales ratio has fallen to 8.3 from around 30 in January 2021. Although it still looks high compared to traditional automakers, that's because Tesla is still growing fast. The company's revenue increased 56% year over year in the third quarter. And that isn't a one-off quarter; its growth over the years is impressive.

TSLA Revenue (TTM) data by YCharts. TTM = traling 12 months..

The above chart compares Tesla's revenue growth over the last three years with that of traditional automakers.

At the same time, its margins remain impressive.

TSLA profit margin (quarterly); data by YCharts.

Overall, Tesla appears to be on a solid footing to keep posting sustained growth in the coming years.

Nio's growth looks impressive

Chinese EV maker Nio expects substantial growth in vehicle deliveries in the fourth quarter and in 2023. Although the company is still incurring losses, it is increasing revenue rapidly, as the chart above shows. Its upcoming models and expansion plans in Europe can be key drivers in the coming years.

Lucid and Rivian look promising

Lucid and Rivian are still at very early stages of their growth compared to Tesla, but both look promising. Lucid managed to establish itself as a serious player by delivering the longest range for its first model, the Lucid Air. The company, which started deliveries at the end of October 2021, has delivered roughly 2,500 cars in a year. It targets producing 6,000 to 7,000 cars in 2022.

After launching the Sapphire, Pure, and Grand Touring variations of the Lucid Air, the company now plans to open registrations for its first SUV, the Gravity, in early 2023. Its focus on the less-tapped Saudi market could help it drive significant growth.

After starting deliveries in September 2021, Rivian has already produced more than 15,000 vehicles. And it has a backlog of more than 114,000 units of its R1, including both SUVs and pickup trucks. It has an attractive order backlog, too: 100,000 delivery vans from Amazon. What's more, it has enough cash to fund its operations through 2025.

Both Lucid and Rivian are at early stages of their growth and are incurring losses. As young EV makers, they are more affected by the supply chain issues that the industry is facing than are the established players. Both companies look promising, but investors should note that these stocks are riskier compared to those of legacy automakers or Tesla.

But they have corrected drastically and, if successful, could generate windfall returns for long-term investors. In short, all four stocks look like attractive buys for 2023.  

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What happened 

A handful of electric vehicle (EV) stocks hit the brakes Monday morning as the optimism that pervaded the market last week began to wane. 

Additionally, several pieces of negative news specific to the EV sector -- including a price target cut for Tesla (NASDAQ: TSLA) and a Barron's column that expressed scepticism about the futures of some EV companies -- contributed to the pessimistic mood shift. 

As of 11:22 a.m. ET, Tesla was trading down by 3.5%, Rivian Automotive (NASDAQ: RIVN) was off by 4.7%, and EV charging company ChargePoint Holdings (NYSE: CHPT) had lost 3.8%. 

So what 

Let's start with the issue that is likely the main concern putting pressure on EV stocks now: persistent inflation. 

Last week, the stock market rallied after the latest inflation report was better than economists had been expecting. In October, the Consumer Price Index increased 0.4% month over month and was up 7.7% year over year, less than the expected sequential increase of 0.6% and 7.9% annually.

That helped the market rally for its best week in nearly five months.

Investors were optimistic that potentially slowing inflation would encourage the Federal Reserve to ease back on its aggressive interest rate hikes. 

But storm clouds returned over the weekend after Federal Reserve Governor Christopher Waller indicated that investors were reading too much into the October inflation report. 

While Waller said the Fed may be at the point where it can consider shrinking the increments of its federal funds rate hikes, he also said that "we're not softening" and added: "Quit paying attention to the pace and start paying attention to where the endpoint is going to be. Until we get inflation down, that endpoint is still a ways out there."

Those comments rained on investors' parade and helped send EV stocks sliding Monday morning.

Adding to some of the EV pessimism was a column published by Barron's over the weekend that asserted that rising inflation and falling share prices could hurt many EV start-ups as they try to raise capital. 

Those concerns could especially be weighing on ChargePoint Holding and Rivian Monday as investors try to gauge how well EV companies will be able to navigate continued supply chain issues and rising costs. 

Finally, investors may also be reacting to Bank of America cutting its share price target for Tesla from $325 to $275. Analyst John Murphy wrote in a research note distributed Monday that supply chain issues will continue to be a problem for the company and the broader electric vehicle industry. 

Now what 

EV stocks have tumbled significantly over the past year -- Tesla fell 44%, Rivian tumbled 74%, and ChargePoint plunged by 51%. 

But Rivian showed in the third quarter that it can continue to increase its vehicle production -- output was up by 67% -- despite the headwinds. And the company still has $13.8 billion cash and cash equivalents on its books, enough to fund its operations through 2025. 

And Tesla's latest results were solid. It increased sales by 56% and earnings by 69% compared to the year-ago quarter, and vehicle production jumped 54% in Q3 to 365,923 vehicles.

ChargePoint investors will get a closer look at the company's financial picture on Dec. 1, when the company reports its results for its fiscal third quarter, which ended Oct. 31. 

But with inflation still high and investors concerned about the potential of a U.S. recession, it's likely that EV stocks could remain volatile in the short term.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What happened

On another bright "green" day for the stock market, shares of electric vehicle manufacturers are doing better than most. As of 11:05 a.m. ET Tuesday, shares of EV leader Tesla (NASDAQ: TSLA) had surged by 5%, well outpacing the S&P 500 (which was up a solid 0.9%). Electric truck rival Rivian (NASDAQ: RIVN) was doing even better with a 6.9% gain and Chinese EV maker Nio (NYSE: NIO) was doing best of all -- up 7.8%.

But news from Tesla was probably the main reason for all of these gains.

So what

As multiple sources reported, Tesla on Monday announced it was cutting the prices for its popular Model 3 sedans and Model Y crossover EVs in China by as much as 9%. As The Wall Street Journal reported, a "standard" Model Y in China now sells for the yuan equivalent of just $39,800 -- versus the $58,190 price being charged for a "long range dual motor AWD Model Y" (the cheapest model shown on Tesla's website) here in the U.S.    

Now why would investors think this is good news? After all, as my Foolish colleague Travis Hoium just pointed out, all else being equal, a 9% reduction in MSRP can easily translate into a 9-percentage-point reduction in operating profit margins. So if Tesla earned 17.2% margins on its cars last quarter (which it did, according to data from S&P Global Market Intelligence), cutting the costs of some Tesla cars by 9% could mean cutting its profits on those cars in half.

If you assume (as seems logical) that rivals Rivian and Nio will have to cut their prices in order to compete with Tesla, that would seem to foreshadow falling profit margins across the board in the EV sector.

Now what

That, as they say, is the bad news. But here's where the news might be a bit better for Tesla, Rivian, and Nio. One reason why Tesla is able to cut prices so drastically, says CEO Elon Musk, is that the costs of the commodities it requires to build its cars "are dropping a lot" and the company now anticipates that it will "see some cost reduction in 2023."  

So it seems that while Tesla is sacrificing some of its profit margin through EV price reductions, it may also be gaining some profits back farther up the supply chain. As long as the cost of manufacturing Teslas (and Nios and Rivians, of course) falls in tandem with the prices these companies charge for their EVs, there's a chance that lower car prices won't mean lower profits for their makers.

Or so investors seem to be hoping Tuesday.

Is that a smart bet? Maybe. It's still possible Tesla's price cuts will spark a price war among EV makers. There's also the potential for the still-rising cost of some commodities -- lithium in particular -- to mess up the math and prevent Tesla and its peers from cutting their total costs enough to make up for their price cuts. When you get right down to it, your safest bet is still to avoid the riskier stocks in this space like Nio and Rivian -- neither of those companies is currently profitable -- and focus instead on Tesla.

Trading at 59 times trailing earnings, Tesla still isn't what I'd call a cheap stock. But at least it's cheaper than the alternatives. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Amazon (NASDAQ: AMZN) is the largest e-commerce company in the world with a market value of over $1.3 trillion. Its website generated 2.7 billion hits last month, making it a no-brainer platform for brands that want to elevate their online presence. 

Peloton (NASDAQ: PTON) is set to join that club, announcing this morning that a range of its products and merchandise items are now available on Amazon's U.S. website. It's the latest in a string of drastic moves by the maker of at-home exercise equipment, to arrest rapidly slowing sales and expanding financial losses.

The partnership is a win for Peloton, but it's likely a bigger win for Amazon. Here's why. 

Peloton is retooling for a world beyond pandemic restrictions

Peloton was one of the best-performing companies during the worst of the pandemic. Gyms were closed, workers were attending their jobs remotely, and society was enduring varying degrees of lockdowns. That left few opportunities for people to get their exercise fix, so a range of interactive at-home equipment that brought the workout – and the classes -- into the home was a proverbial home run. 

But as pandemic restrictions eased thanks to widespread vaccinations, Peloton's business quickly deteriorated. The company will report its financial results for the fiscal 2022 full year this week, and it's expecting that revenue will come in at around $3.5 billion, which would be a sizable drop from the $4 billion it generated in fiscal 2021. 

The drop in sales is underscored by a steep drop in engagement, measured by the average number of monthly workouts in the most recent fiscal third quarter which fell 28% year over year. Put simply, gyms are open, people are free, and they're using their Pelotons far less often. 

The company installed a new CEO at the beginning of 2022 and tasked him with righting the ship. So far, sweeping changes have been made which include staff layoffs and broad cost cutting, a trial of a new subscription-based sales model for its equipment, and moving production to external manufacturers. 

Now, for the first time in its history, Peloton will deviate from its direct-to-consumer sales model and offer the Peloton Bike, Peloton Guide, accessories, and apparel outside of its showrooms and its website, on Amazon.com. 

Why this partnership is a big win for Amazon

Earlier this year, Wall Street was abuzz with the news that Amazon was interested in buying Peloton. The move would have been well within Amazon's wheelhouse because it's no stranger to acquisitions -- and Peloton would've been a relatively small one given the company is worth just $4 billion as of this writing, thanks to a 92% drop in its stock price from its all-time high.

It ultimately never happened, but with this new partnership in place, Amazon gets the benefit of selling Peloton's products on its website and earning revenue without the baggage of absorbing a business that has lost a whopping $1.8 billion over the last four quarters. Additionally, Peloton's financial situation is rather grim with just $879 million in cash on hand which is mostly a result of taking on $750 million in debt in May. 

Peloton's Chief Financial Officer has commented that customers initiate 500,000 Peloton product searches every month on Amazon.com, reinforcing the positive impact this deal could have for his company. But it might be just as beneficial for Amazon, because every time a customer can't find what they're looking for on Amazon.com, it increases the likelihood that they will navigate to another website which costs the company more than just that one potential sale. 

When a customer can find what they're looking for, Amazon not only wins the sale, but its artificial intelligence algorithms gain an opportunity to push other products into their view and potentially generate further revenue. It's estimated that these recommendation engines are responsible for 35% of Amazon's online sales, so being able to satisfy that monthly search volume for Peloton products will be a win for Amazon overall. 

Amazon stock is a buy now

Amazon is fresh off a strong, but mixed, second quarter of 2022. It suffered a net loss mainly as a result of its stake in electric vehicle maker Rivian Automotive (NASDAQ: RIVN), because shares in that company have fallen sharply recently. 

But that speaks to Amazon's operational diversity. It offers investors a cross-section of the digital economy and it continues to drive innovation. Having multiple revenue streams insulates the company from external shocks like high inflation, which is currently putting pressure on consumers and, therefore, Amazon's e-commerce segment. But its cloud segment, driven by Amazon Web Services, still managed to grow by 33% year over year during the quarter. 

Additionally, its relatively new advertising segment has delivered $33.9 billion in revenue over the last four quarters and remains an exciting opportunity going forward thanks to the company's valuable media assets, like the rights to the NFL's Thursday Night Football. 

While the Peloton deal is exciting, Amazon is more than just an e-commerce company now and there's no shortage of reasons to own the stock. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Amazon.com (NASDAQ: AMZN) just had a great quarter, and its stock is rising as a result. Although shares are still down 16% year to date, Wall Street expects the e-commerce giant to keep growing because its business model seems to show resilience even during recessionary times. 

Yet, as good as business was for Amazon, there are warning signs too that should give investors pause. Maybe now isn't the best time to buy its stock.

E-commerce slows as cloud services soar

Amazon's growth rate is slowing. While revenue of $121 billion was up 7.2% year over year, that was actually down sequentially and represents its slowest growth in 20 years. It also lost $2 billion in the period, with both domestic and international retail showing operating losses.

The core retail business continues to face a number of headwinds right now, including rampant inflation, energy costs that remain historically high, elevated transportation costs, and rising labor costs. 

While much of Amazon's net loss can be blamed on the continued downward spiral of electric truck maker Rivian Automotive Inc. (NASDAQ: RIVN) in which Amazon has a big investment and caused a $3.9 billion pre-tax valuation loss, those macroeconomic inputs are also impacting Amazon's margins. 

But what's keeping the e-commerce company's financial position looking better than it otherwise would is the cloud services business, Amazon Web Services (AWS), which showed solid, double-digit growth of 33% in the quarter. AWS revenue hit $19.7 billion, generating operating income of $5.7 billion, also up 36%.

Trimming the fat and then some

And that may be masking a deeper issue. Amazon shed almost 100,000 workers in the quarter, or about 6% of its workforce, and they are the largest cuts it has made in a single quarter. 

CFO Brian Olsavsky said they added employees in the first quarter due to the omicron variant of the coronavirus, but they essentially became redundant afterward. It was able to get rid of most of those let go through normal attrition, and Amazon still has over 188,000 more workers than it did last year. He also said Amazon would likely increase staffing levels for the holidays again.

Still, after years of operating as a job-creation machine, the growth trajectory has suddenly come to an end. The reduction also likely helped Amazon save on labor costs in the quarter, something it struggled with during the so-called Great Resignation when people left their jobs and never returned to the market.

In last year's fourth quarter, for example, Amazon took a $4 billion charge mostly because of labor costs, and though Olsavsky said last quarter the company needed to improve efficiency while it increased staffing, it instead reduced employment levels.

The reduction comes as many other tech companies are also slashing their payrolls, including Microsoft (NASDAQ:MSFT) and Shopify (NYSE: SHOP), while Alphabet (NASDAQ:GOOGL) and Meta Platforms Inc. (NASDAQ:META) have eased back on hiring. 

Clouds on the horizon

Amazon's payroll cuts likely helped improve its financial picture for the period, but it hints that the recessionary winds blowing may not be so transient. If we enter a protracted period of economic contraction, Amazon may see e-commerce growth slow as consumers find it difficult to keep spending.

Amazon.com is no longer necessarily the place to find the best price on goods, though admittedly that may not have been the prime attraction for its service in a while. Breadth of product and delivery speed has been a bigger value.

In a recession, though, that might not be the case, and despite its cloud services' increasingly essential to the overall businesses as time progresses, online retail may hamper performance. The underlying message of the job cuts just might mean this is not the time to buy Amazon stock.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What happened

Shares of Rivian (NASDAQ: RIVN) are making big gains in today's trading. The electric vehicle (EV) company's stock was up roughly 7.5% as of 3 p.m. EDT Wednesday. Meanwhile, the S&P 500 index climbed roughly 1%, and the Nasdaq Composite index was up roughly 1.9%. 

Growth-dependent stocks have seen volatile trading recently, and the market has seen big swings this week. While there doesn't appear to be any fresh, business-specific news driving the company's share price higher, Rivian is benefiting from an uptick in bullish sentiment lifting the broader market. 

So what

After a day of dramatic sell-offs on Monday, yesterday's trading delivered some rebound momentum, and the recovery has been even stronger Wednesday. Rivian published an update last week announcing that it had produced 2,553 electric vehicles in its recently completed first quarter and that it was on track to meet its goal of delivering 25,000 vehicles this year. The combination of positive momentum for the market today and recent indications that the business is making encouraging progress are prompting big gains for the stock. 

Now what

Rivian's business has just recently started ramping up significantly, with the $54 million in sales that it posted in last year's fourth quarter pushing full-year revenue to $55 million. Investors won't have to wait long to get a more detailed look at Rivain's business operations and outlook. The company recently announced that it will be publishing its first-quarter earnings results and hosting a conference call after the market closes on May 11.  

The company now has a market capitalization of roughly $37 billion and is valued at approximately 19 times this year's expected sales. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Rivian stock is soaring today appeared first on The Motley Fool Australia.

What happened

Investors don't expect electric vehicle (EV) start-ups to be profitable for several years after commercial production begins.

One key to profitability is manufacturing at volumes that will cover fixed costs. So when EV maker Rivian Automotive (NASDAQ: RIVN) told investors in its March report for fourth-quarter 2021 results that it was reducing production guidance, investors fled. Over the full month of March, Rivian stock dropped 25.6%, according to data provided by S&P Global Market Intelligence.

That plunge has continued so far in April, with Rivian shares now down more than 40% since the beginning of March. 

So what

Though the company said it has capacity to produce as many as 50,000 of its electric vehicles this year, it said in its shareholder letter on March 10 that it only expects to make 25,000 due mainly to supply chain issues. 

More recently, in a Securities and Exchange Commission (SEC) filing dated March 31, 2022, the company added additional risks, including the conflict in Ukraine as well as fuel and energy prices, as potentially impacting its progress. The company specifically noted it has experienced impacts in "facility construction to equipment installation to vehicle component supply".

Now what

Investors already were aware that Rivian was trying to navigate how inflation was affecting its raw material costs. On March 1, the company said it was raising prices on both its pickup trucks and SUVs, including for those that had already been ordered. After facing immediate backlash from customers who had made those reservations at a lower price, the company reversed its decision.

Rivian CEO RJ Scaringe acknowledged the mistake, stating in a letter to shareholders, "We didn't give you enough insight into what was driving these decisions...In speaking with many of you over the last two days, I fully realize and acknowledge how upset many of you felt."

The takeaway for investors is that the company will have to shoulder those rising costs internally for the more than 80,000 vehicles that were ordered prior to March 1. Rising costs combined with Rivian's lower pace of production pushed many investors to sell the stock in March. 

In the first week of April, Rivian announced it produced 2,553 vehicles in the first quarter. It added that it believes it remains "well positioned" to achieve the lowered guidance of 25,000 vehicles it provided just a month prior.

That didn't give investors any additional incentive to buy the stock, however. But with the share price down more than 60% so far in 2022, it may be close to a level that long-term investors find makes for a good time to buy. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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The share price of electric vehicle (EV) maker Rivian Automotive (NASDAQ: RIVN) rose by more than 17% Tuesday. Even in the world of EV stocks, which tend to rise and fall rather dramatically, that's a significant price spike. 

There was no specific news driving Rivian's share price higher, though. Rather, it appears that investors may be trying to take advantage of the fact that the stock has fallen by more than 47% over the past three months.

Are investors right to be snatching up shares of the electric truck maker now? I think so, but I also think they should temper their expectations. 

There's no denying that Rivian has created a fantastic product. Its R1T model is the first-ever all-electric pickup truck, and it won MotorTrend's Truck of the Year award for 2022. 

That doesn't mean it will be a slam dunk when it comes to sales, but it does indicate that Rivan could have a first-mover advantage in the EV pickup truck space. 

At a base price of about $79,000, the R1T isn't cheap, and some other electric trucks will be hitting the market soon, most notably the Ford F-150 Lightning. But as Tesla's success has demonstrated, there's a market for EVs that are designed, built, and sold by companies devoted entirely to that specific niche. 

Will traditional automakers succeed in the EV industry? Of course. But it seems a bit premature to count out disruptive players like Rivian that already have great products. 

One of the biggest arguments against Rivian right now is the fact that it's facing supply chain problems and rising costs. 

While those are significant hurdles, and the company forecasts that it'll only produce 25,000 vehicles this year, it also has enough cash to keep the company growing.

Rivian ended 2021 with $18.4 billion in cash, which should give the EV maker the financial cushion it needs to stay afloat as it expands production. 

That being said, there are no guarantees for Rivian or its investors. The automotive industry is experiencing a significant shift right now, and many traditional automakers will successfully move from gas-powered to battery-powered vehicles. 

Some of the current crop of hopeful EV makers will carve out their own niches over the next few years, and some may fade away. 

But with its current cash stockpile and its award-winning truck, Rivian has the potential to be a success over the long term, which is why I think opening a small position in this EV stock could be a smart move. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Rivian stock soared today — is it a buy? appeared first on The Motley Fool Australia.

What happened?

Investors have punished the stock of Rivian Automotive (NASDAQ: RIVN) this year, sending its shares down by more than 60%. The negative sentiment was still in evidence Thursday ahead of its fourth-quarter and full-year report, which is due out after the closing bell. Shares of the electric vehicle start-up were down almost 10% in early trading, and remained lower by 9% as of 1:12 p.m. ET.

So what?

In this next report to investors, the company will be forced to confront early missteps such as a lack of communication regarding the departure of its chief operating officer, its failure to hit internal production estimates for 2021, and a recent price increase it was forced to walk back. But investors will be more interested in what Rivian says about its prospects for ramping up its production volume, updated reservation data, and its plans for expansion. They will be particularly interested to hear about the status of its contract to sell up to 100,000 commercial delivery vans to Amazon.com Inc (NASDAQ: AMZN). 

Now what?

Supply chain problems are being reported by most automakers -- large legacy names as well as start-up EV makers. Rivian has already made it clear that its materials costs are increasing. And after having to backtrack on its announced price increase for existing reservation holders, the company will now have to bear those added costs itself. Investors will want to hear more details about those higher expenses and how they will affect margins. 

While its 60% year-to-date share price decline may seem to create a tempting entry point, investors should keep in mind that the company still carries a lofty market cap of $36 billion. 

Any downward adjustments to its 2022 production estimates or suggestions that its path to profitability will take longer than previously forecast will likely knock the stock down even further. Those details are what investors should focus on in Rivian's report when it arrives. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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What happened

One day after electric truck company Rivian Automotive (NASDAQ: RIVN) voluntarily blew up its stock price by announcing it would raise the price of its R1T pickup truck by 17%, and its R1S SUV by 20%, Rivian stock is tumbling once again on Thursday.

As of 10:25 a.m. ET, Rivian is down another 5% -- a total of an 18% drop since this debacle began.

So what

Rivian tried to mitigate the PR damage this morning. After announcing yesterday that "inflationary pressure, increasing component costs, and unprecedented supply chain shortages and delays for parts (including semiconductor chips)" necessitated the price hikes just yesterday, today Rivian CEO RJ Scaringe promised that Rivian would eat some of those costs itself.

In a letter to customers, he wrote, "Earlier this week, we announced pricing increases that broke the trust we have worked to build with you. ... [W]e wrongly decided to make these changes apply to all future deliveries, including pre-existing configured preorders."

In an attempt to rectify this mistake, Scaringe said, "For anyone with a Rivian preorder as of the March 1 pricing announcement, your original configured price will be honored. If you canceled your preorder on or after March 1 and would like to reinstate it, we will restore your original configuration, pricing, and delivery timing."

Now what

This should go a ways toward repairing customer trust in the company, but ... once burned, twice shy. Rivian is still going to suffer a reputational hit from this debacle.

It will also take a financial hit. In explaining the company's original move to raise prices, Scaringe reiterated that "everything from semiconductors to sheet metal to seats has become more expensive," pointing out that other automakers have raised their average prices "more than 30%" to cover their own added costs of production. Rivian will now have to eat those higher costs on the more than 70,000 preorders it racked up in past months.

If you figure that the average price increase that the company attempted to pass along was about $13,000 per vehicle, you have to assume that Rivian is now looking at something like $910 million in unanticipated costs -- and losses -- from keeping its word on all those preorders.

Final point: Rivian will want to make up those losses down the road. Expect even higher prices on new preorders and sales going forward and a consequent decrease in customer willingness to pay those high prices -- depressing future sales.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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Barely days ago, the stock of Rivian Automotive (NASDAQ: RIVN) caught the market's attention when billionaire George Soros' investment fund revealed a stake in the electric vehicle (EV) start-up. Turns out, Soros isn't the only billionaire that eyed Rivian.

In its latest 13F filing with the Securities and Exchange Commission, activist investor and billionaire Dan Loeb's hedge fund, Third Point, revealed  ownership of 4,046,572 shares of Rivian for the quarter ended Dec. 31, 2021. As of that date, Third Point's Rivian stake was valued at roughly $408.3 million. 

Notably, Third Point didn't own any shares in Rivian until the third quarter, which means something about the EV pickup truck manufacturer must have caught Loeb's attention in the following months. Rivian stock surged Thursday morning on the news, encouraging some to bet on Rivian stock ahead of the company's quarterly earnings release on March 10. Should you jump in, too? 

But while institutional buying in stocks is seen as a stamp of approval, you must also remember that such financial institutions do not disclose their stock moves in real time, and a lot may change by the time you find out what they bought and sold.

So for example, the latest filings from Loeb's and Soros' funds reveal their portfolios as of the end of 2021, and there's no knowing yet whether they still own, have bought more, or sold off Rivian shares since. 

In fact, if Loeb and Soros saw an opportunity in the sharp dip in Rivian's stock price in the end of 2021, they must be disappointed given how far the EV stock has fallen further since -- it's down a whopping 37% year to date, as of this writing. 

The point being, if you want your money's worth, you might want to pay less attention to billionaire moves on a stock and stay laser-focused on the company's underlying fundamentals and growth opportunities. 

Rivian was an early mover in the red-hot EV industry, and its R1T pickup truck even won the 2022 MotorTrend Truck of the Year award. However, Rivian failed to meet its production target last year even as its net loss mounted to $2.2 billion against revenue of only $1 million during the nine months ended Sept. 30, 2021. 

Yet the demand for the R1T pickup has been strong so far, and Rivian is reportedly ramping up production rapidly now to nearly 200 units per week, according to Bloomberg. Meanwhile, Rivian is working on its R1S SUV as well as its commercial vans, for which it has already secured an order for 100,000 units from e-commerce giant Amazon (NASDAQ: AMZN).   

Rivian, though, must show the numbers to gain investors' faith, which is why its upcoming earnings report is so important. Has it really scaled up production and deliveries? Has it delivered its first electric delivery vehicle (EDV) to Amazon as planned? Is it on track to start key projects like the construction of its second factory in Georgia this year? 

These are just some of the important questions investors in Rivian should seek answers to on March 10, as only answers in the affirmative can help the stock rebound and sustain momentum given that it's still commanding a steep market capitalization of $58 billion despite the recent plunge. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

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