Why Rivian, Lucid, and Nikola Tanked Today
Ramping up a young business during an economic downturn or recession is an uphill battle. That's even more true when the business in question is highly capital-intensive and operates in a sector that's still maturing. And after Wednesday's interest-rate decision by the Federal Open Market Committee -- the policy-making arm of the Federal Reserve -- the market seems to be assuming that a hard landing or recession is coming.
That mentality had unprofitable, growth-oriented EV stocks slumping Thursday morning. As of 11 a.m. ET, Rivian Automotive (NASDAQ: RIVN), was down 7.4%, Lucid Group (NASDAQ: LCID) was had dropped by 9.7% and Nikola (NASDAQ: NKLA) was off by 7.9%.
Some investors are taking the Fed's decision to boost benchmark interest rates faster than previously expected as a signal that a recession is unavoidable. At the very least, it looks as if economic growth in the near term will be bumpy. Rivian and Lucid had already lowered their forecasts for 2022 vehicle production due to supply chain issues. And rising raw material costs are affecting all manufacturers, but they are particularly problematic for companies that have only recently begun commercial production and sales.
Source Fool.com
