Why Rivian Stock Jumped Today

Investors pushed shares of Rivian Automobile (NASDAQ:RIVN) up as much as 5% Wednesday morning. Two news stories released today have been interpreted as a tailwind for the electric vehicle (EV) maker. Rivian shares pared those gains as the market pulled back from morning highs, but remained up 2.2% as of 1:05 p.m. ET.

Investors received positive data this morning in the fight against inflation. This could lead to significant help for Rivian in the future, as it struggles to increase electric vehicle sales and stem losses. At the same time, new tariffs imposed by the European Union (EU) on imported Chinese electric vehicles could help European and American electric vehicle manufacturers increase their market share in EU countries.

Rivian may still need to raise new capital

The news that the consumer price index (CPI) remained stable for the month of May contributed to the rise in the bond market, sending yields on 10-year Treasury notes to their lowest level since April. This may not affect Rivian Automotive today, but borrowing costs could become an important topic for Rivian sooner than some investors think.

While the company ended the first quarter with nearly $7.9 billion in cash and equivalents, that represents a decline of more than $1.5 billion since the start of the quarter. Rivian’s capital expenditures and operating losses are rapidly empty your cash. This large sum of money was only there in part because Rivian also raised almost $3 billion in 2023.

If the disinflation seen in the CPI report helps lead to interest rate reductions, Rivian’s additional capital needs would be less. This is essential as the company continues to grow its business.

The other news, that the EU will impose a tax of up to 38% on imported Chinese electric vehicles deemed unfairly subsidized, could mean additional sales for Rivian in Europe as it increases its production levels.

Neither news helps Rivian’s business today, but investors looking ahead should feel good.

Should you invest $1,000 in Rivian Automotive right now?

Before buying Rivian Automotive stock, consider this:

THE Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now…and Rivian Automotive was not one of them. The 10 selected stocks could produce monster returns in the years to come.

Consider when Nvidia made this list on April 15, 2005…if you had invested $1,000 at the time of our recommendation, you would have $740,886!*

Equity Advisor provides investors with an easy-to-follow plan for success, including portfolio building advice, regular analyst updates, and two new stock picks each month. THE Equity Advisor the service has more than quadrupled the return of the S&P 500 since 2002*.

See the 10 values ​​»

*Stock Advisor returns June 10, 2024

Howard Smith holds positions at Rivian Automotive. The Motley Fool has no position in any of the securities mentioned. The Motley Fool has a disclosure policy.

For what…

Read Complete News ➤

Leave a Reply

Your email address will not be published. Required fields are marked *

two × 3 =