Rivian Shares Slide: What Should Investors Do Now?

Rivian (NASDAQ:RIVN) shares continued to slip this week from news the company fell far short of its 2021 delivery targets, and a COO is stepping down.

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Rivian Automotive (NASDAQ:RIVN) shares slid further on Tuesday, with news that the company’s chief operating officer stepped down last month and its production targets landed short. Shares dropped a further 31% in the last month. That’s up from its initial public offering by just 4% and down 55% from 52-week highs.

What happened?

It’s been a dramatic last few months for the electric vehicle company for Motley Fool investors. The Amazon-backed electric vehicle maker came out with lower expectations recently, stating it was a “few hundred vehicles short” of its 2021 target of 1,200 trucks. Instead, it produced 1,015 vehicles for 2021 due to supply chain constraints and delivered 920.

Furthermore, Rivian had its COO Rod Copes retire recently, with his duties “absorbed by the company’s leadership team.” While this is likely separate from production shortages, it cannot be ignored — especially considering his departure was apparently connected to the production ramp up.

So what?

It’s a long way from the largest initial public offering of 2021 on the Nasdaq. Rivian looked like it would be the next big thing. However, shares started a major drop after Amazon stated it would start buying its electric vehicle delivery vans from Stellantis.

The question remains as to whether Rivian can keep up. And so far, it’s not looking good. Motley Fool investors were originally excited about the electric pickup, but it’s now meeting stiff competition from General Motors to Ford.

Still, last week Morgan Stanley remained confident about the future of Rivian. This is despite the company announcing it really is far off from earning close to a profit. Instead, it wants to bring its trucks on the market fast. The goal is to produce as many as 400,000 electric trucks per year by 2024. But that comes with a hefty US$5 billion price tag.

Now what?

Sure, that’s all very exciting, but as of right now, Rivian can’t even break 1,000 trucks delivered. Even Morgan Stanley admits it’s an “extremely difficult path to ramping EV manufacturing.” And although Morgan Stanley stated it’s the Amazon partnership that makes the company so exciting, Amazon seeking out other providers isn’t exactly promising news.

There seems to be a lot of risk around electric vehicle stocks like Rivian. Motley Fool investors would therefore do well to consider other options. Putting your investment in Rivian is like putting all your eggs in one basket. But considering an automotive manufacturer like Magna International (TSX:MG)(NYSE:MGA) is like having your hands in every electric vehicle pie.

Magna stock provides automotive parts to many of the large automotive companies. And it’s been shifting focus towards electric parts as well. That goes for both electric vehicles, but also for ICE cars with electric parts. As the shift continues, Magna will be a prime target for those wanting in on the electric vehicle boom.

And what’s great is Magna is now a highly valued stock, trading at 14.5 times earnings. Furthermore, it’s far below its consensus target price of $128 by 18% as of writing. Plus, you get a nice little 2.04% dividend yield. So, before you consider an uncertain future with Rivian, I’d look at Magna to create a diversified portfolio for Motley Fool investors.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool recommends Amazon and Magna Int’l.

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