Rivian Automotive Inc (NASDAQ: RIVN) is down about 10% on Monday after the EV company announced it was recalling “nearly all” vehicles it has made to date.
Not a threat to Rivian’s cash stature
The Irvine-headquartered firm says it received at least seven complaints related to steering safety.
While it’s confident that only 1.0% of its vehicles have the issue, Rivian is recalling 12,212 in total, including both R1T and R1S, and even some of the electric delivery vans it handed over to Amazon, to be on the safe side.
The electric vehicles manufacturer ended its recent financial quarter with $15.5 billion on hand. Since it’s a simple repair, the recall is not very likely to meaningfully hit its cash stature.
For the year, Rivian shares are now down close to 70%.
Rivian shares have a 50% upside from here
Last week, Rivian reiterated its commitment to producing 25,000 electric vehicles this year (read more). Reacting to today’s stock market news, Wedbush Securities’ Dan Ives said:
The last thing any Rivian investor wants to see in a shaky market is a broad recall that hurts the brand and gives some lingering credibility issues to production going forward. This is a black eye for Rivian.
Nonetheless, he doesn’t expect the recall to be anything more than a “speed bump”. Ives continues to recommend buying Rivian shares and sees upside in them to $45 – about 50% up from here.
He’s convinced the EV company will still hit its production target for 2022.
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