Rivian Automotive, Inc (NASDAQ:RIVN) was falling over 7% lower on Wednesday as the electric vehicle manufacturer headed into its first-quarter earnings print, which is expected after the market close.
After Rivian printed its fourth-quarter earnings miss on March 10, the stock gapped down 6.9% the following day and plunged an additional 12% over that day and the two trading days that followed. For that quarter, Rivian reported a net loss of $2.43 per share on revenues of $54 million, which missed the consensus estimate of a loss of $1.97 per share on revenues of $60 million.
For the first quarter, the Zacks consensus estimate sees a loss of $1.50 per share on revenues of $113.6 million.
From a technical standpoint, Rivian’s stock appears headed for at least a bounce. Of course, holding stocks or options over an earnings print is akin to gambling because stocks can react bullishly to an earnings miss and bearishly to an earnings beat. Options traders, particularly those who are holding close dated calls or puts, take on extra risk because the intuitions writing the options increase premiums to account for implied volatility.
The implied move for options of Rivian expiring this week is a whopping 19%.
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The Rivian Chart: On Wednesday, Rivian opened flat but intraday, the stock fell toward Tuesday’s low-of-day. If Rivian closes the trading session within Tuesday’s trading range, the stock will print an inside bar pattern on the daily chart, which in this case leans bearish because Rivian was trading lower before printing the formation.
- If the stock breaks Tuesday’s low-of-day intraday and closes the trading session near its low-of-day price, Rivian will print a new all-time low, with no support below in the form of price history.
- If Rivian falls to a new all-time low on Wednesday or Thursday, a bounce is likely to occur because the stock’s relative strength index (RSI) is already measuring in low at about 25%. When a stock’s RSI falls below the 30% level, it becomes overbought, which can be a buy signal for technical traders. When Rivian’s RSI reached the 27% on March 14, the stock shot up 62% over the 12 trading days that followed.
- Rivian has a gap above between $25.83 and $28.71. Gaps on charts fill about 90% of the time, which makes it likely Rivian will rise up to fill the empty trading range in the future. It should be noted, the stock could soar up to close the gap without reversing course into an uptrend. Bearish traders not already in a position can watch for Rivian to form a reversal candlestick near the top of the gap to take a possible short position.
- Rivian has resistance above at $29.32 and $34.28 and support below at Tuesday’s low-of-day.
