Why Rivian Stock Skidded to a 4% Loss on Thursday

Two developments on Thursday combined to drive Rivian Automotive (NASDAQ: RIVN) to a notable stock market decline.

The first piece of news was an analyst's downgrade, and the second was a relatively large-scale recall from a peer electric vehicle (EV) maker. When the smoke cleared from that trading session, Rivian's share price had eroded by more than 4%. By contrast, the benchmark S&P 500 index was down by just 0.2% at the close of trading.

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An analyst's downgrade and a rival's recall

Piper Sandler's Alexander Potter was the prognosticator behind the downgrade. Before market open Thursday, he reset his recommendation on the EV maker. He now has a neutral rating on the stock, one peg below the overweight (read: buy) tag he had on it previously. Potter also assertively reduced his Rivian price target to $13 per share from $19 per share.

Although there is much that the analyst still likes about Rivian, he feels that the EV maker will struggle due to a lack of meaningful catalysts this year. (Its highly anticipated new R2 SUV platform isn't due to debut until 2026.) Additionally, he expressed concern about economic and trade policy risks to Rivian's business, as the recently ignited trade disputes between the United States and many of its key trading partners could lead to significantly higher costs for automakers.

On top of that, the big news in the EV space Thursday had to do with a recall. Tesla announced it was recalling more than 46,000 of its futuristic Cybertrucks due to the risk that an exterior body panel may fall off while the vehicles are being driven, putting other vehicles on the road at risk.

This is the eighth recall for the still relatively young Cybertruck, and covers vehicles manufactured between November 2023 and the end of February 2025 -- which is almost all of them.

A time to retreat

The one-two whammy of downbeat company-specific news and unfavorable industry news didn't do Rivian's stock any favors. Like Potter, I see quite a few elements to like about Rivian's business and management, but the prospects for the whole U.S. auto industry and the EV segment in particular are getting cloudier these days. I wouldn't be an overly enthusiastic buyer of Rivian stock just now.

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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.