AUTO - Explaining Today's Drop In Rivian Stock
Rivian Automotive ( NASDAQ:RIVN )
Rivian Automotive ( NASDAQ:RIVN ) stock fell this morning after the EV manufacturer backed out of a possible deal with the world’s most famous luxury car brand just three months after saying they would. Within minutes of the markets opening on Monday, Rivian stock fell 5.2%.
But as of 11 a.m. ET, the EV stock had recovered some of its losses, trading down by just 2.6% as investors sought to make sense of Rivian’s decision to cancel the transaction.
What’s the Reason?
At the beginning of September, Rivian and Mercedes-Benz announced a partnership to produce reasonably priced commercial electric vehicles. The partnership would first focus on producing two huge vans. They planned to use an existing Mercedes-Benz European plant to construct a new all-electric manufacturing facility to make the two vans over the next three years.
The news caused a surge in Rivian stock, as investors saw the partnership with a worldwide luxury manufacturer as a validation of the company’s work in the EV market.
Investors may have missed that Rivian and Mercedes-Benz simply signed a memorandum of understanding (MoU), a nonbinding agreement, and that final, binding agreements were still needed before the joint venture could be formed.
Legally enforceable agreements will never be made public. Rivian said this morning that it would not pursue the MoU with Mercedes-Benz and ...
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