To The Moon

What happened

Shares of EV start-up Rivian Automotive took a hit immediately after the company released its fourth-quarter and full-year 2021 financial update on March 10. Investors particularly didn't like the operational update and 2022 production guidance. The stock recovered some in the ensuing weeks, but a recent Securities and Exchange Commission (SEC) filing has investors spooked once again. That helped cause a decline of 9.3% in Rivian shares today, as of closing.

So what

In its quarterly report, Rivian said several factors led it to reduce its production volume guidance for 2022. Though the company said it has the capacity to manufacture 50,000 vehicles, it said it only anticipated 25,000 will be produced this year.

Image source: Rivian Automotive.

The company identified headwinds including a planned 10-day shutdown to improve its production lines, supply chain constraints, a spike in COVID-19 cases from the spread of the omicron variant, and even severe winter weather at its Illinois facility.

But in a new SEC filing from late last week, the company added to that list of risk factors. Rivian stated that "the conflict in the Ukraine, fuel and energy prices, regulatory requirements and incentives, [and] competition" would also impact demand for its products.

Now what

With the war in Ukraine and other geopolitical events ongoing, along with a general environment of rising prices, the added headwinds may end up in another reduction in production guidance from the company. At the very least, Rivian has already made clear it is contending with rising raw material costs. After a flawed attempt at raising its product prices even for customers who had previously made reservations, Rivian backtracked on that request.

Those additional costs will now be absorbed by the company, hitting its results even more. Some investors are getting ahead of any additional potential bad news from the company. If the stated headwinds result in another cut in Rivian's production outlook, or if the bottom line is significantly impacted by rising costs, there could be further downside for the stock.