Since mid-March, the dust has settled on the Rivian Automotive (NASDAQ:RIVN) sell-off. RIVN stock has found support, at between $13 and $14 per share. For investors bullish on the electric vehicle megatrend, this may seem like an ideal entry point to build a position.
After all, with so much negativity priced into the EV maker’s shares since February, surely shares have become oversold, right? Not so fast. After the recent spate of bad news, including underwhelming production guidance and news of further shareholder dilution, positive developments out of Rivian since then have been slim-to-none.
Even more telling, is the level of confidence by Rivian’s C-suite and other insiders. Measuring this by the amount of insider buying relative to insider selling, it’s hard not to conclude that those “in the know” have little faith that a comeback is in store for this struggling upstart.
| RIVN | Rivian Automotive | $13.28 |
RIVN Stock: Little in the Way of Positive News
Admittedly, one can say the market absorbed the recent spate of bad news. I’m talking not only about the aforementioned production guidance and dilution news.
News of Rivian’s efforts to remove the exclusivity terms of its electric van deal with Amazon (NASDAQ:AMZN) is another disappointing development.
However, there has been little in the way of positive news. Still, that hasn’t stopped more optimistic commentators from grasping at straws, trying to construct a bull case.
This has included pointing to the company’s high cash position relative to its market cap, as if this early-stage company isn’t poised to burn through the bulk of this war chest before year’s end.
There’s nothing wrong with being hopeful, but the facts available to us today point to more trouble ahead, as does the low insider confidence I spoke of above. This factor alone may signal the likelihood of materially improved operating performance.
Insider Buying (or Lack Thereof)
A high level of insider buying can often be a bullish signal. While it is not 100% guaranteed that a company whose insider roster is buying up shares is on the verge of a breakout, insiders sell for many reasons, but buy for one: confidence that the stock is going to go up in value.
So, how much insider buying has been going on with RIVN stock lately? None at all. According to Finviz, which tracks insider purchases/sales, while two members of Rivian’s C-suite sold a small amount of RIVN shares in mid-February, insiders have yet to buy any additional shares in 2023.
In fact, there has been no insider buying since last May. That’s when CEO RJ Scaringe, and board member Jay Flatley, purchased 41,000 shares and 40,000 shares, respectively. These insiders no longer have any “skin in the game.”
Beyond the small C-suite sales last month, insiders have not sold a significant portion of their personal positions over the past year. However, the lack of “back up the truck” sentiment among these individuals with a presumably clearer picture of the company’s prospects doesn’t exactly inspire confidence.
Bottom Line
Recently, analysts from Battle Road Research laid one of a six-point blueprint Rivian could follow to renew investor sentiment for RIVN.
Point number one out of the six was increased insider buying, which the investment research firm is “perplexed” isn’t happening right now. Sure, it’s possible Battle Road may be merely giving Rivian’s insiders the benefit of the doubt with this statement.
But there’s little mystery why the C-suite and the board aren’t pouncing on RIVN at its current prices. Chances are the key issue at hand (high cash burn) will continue to place pressure on shares.
The story has yet to change with RIVN stock. That’s clear from a lack of positive news, alongside a lack of insider buying. Staying away from this floundering EV play remains your best move.
RIVN stock earns a D rating in Portfolio Grader.
On the date of publication, Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.
The InvestorPlace Research Staff member primarily responsible for this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.