Why Rivian Stock Is Sinking Today

There are multiple crosscurrents in the electric vehicle (EV) sector right now. Analysts are trying to weigh how manufacturers will weather a potentially changing regulatory climate next year as well as what it will mean for demand.

That has resulted in mixed messages on the outlook for Rivian Automotive (NASDAQ: RIVN). Today, one Wall Street analyst released a report downgrading the stock, and shares are sinking as a result. After dropping more than 5%, the stock was still down by 4.2% as of 12:15 p.m. ET on Wednesday.

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No catalysts on the horizon

Today's drop comes after Baird analyst Ben Kallo cut his rating on Rivian stock to the equivalent of a hold from a buy. The stock has jumped by nearly 40% in the last month after the company announced two new capital infusions.

One of those was potentially $5.8 billion in investments from Volkswagen Group over the next three years. Also last month, the U.S. Department of Energy said it planned to provide a conditional loan of up to $6.6 billion to help Rivian build a second U.S. factory.

Those are positive developments, but Kallo thinks that there are no new catalysts coming in the near future. That's because the incoming Trump administration is possibly going to eliminate tax incentives for EV buyers, and demand may continue to lag next year.

The stock's recent move higher has already taken Rivian's improved financial condition into account. Until EV sales accelerate, the stock may languish. Investors should look beyond next year, however, if they think the company's next-generation R2 vehicles will resonate with EV buyers. That model will begin production next year with shipments starting in early 2026.

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Howard Smith has positions in Rivian Automotive. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.