Why Rivian Stock Jumped Today

Investors pushed shares of Rivian Automotive (NASDAQ: RIVN) higher by as much as 5% Wednesday morning. Two news items released today were interpreted as tailwinds for the electric vehicle (EV) maker. Rivian shares pared those gains as the market pulled back from the morning’s highs, but they remained higher by 2.2% at 1:05 p.m. ET.

Investors received a positive data point in the fight against inflation this morning. That could lead to meaningful help for Rivian in the future as it struggles to grow EV sales and stem losses. At the same time, new tariffs from the European Union (E.U.) on imported Chinese EVs could help European and U.S.-based EV makers grow market share in EU countries.

Rivian still might need to raise new capital

The news that the Consumer Price Index (CPI) was flat for the month of May helped drive the bond market higher, dropping yields on 10-year treasuries to the lowest level since April. That might not affect Rivian Automotive today, but borrowing costs could become an important story for Rivian sooner than some investors think.

While the company ended the first quarter with nearly $7.9 billion in cash and equivalents, that was a drop of more than $1.5 billion just since the start of the quarterly period. Rivian’s capital expenditures and operating losses are quickly draining its cash hoard. That large amount of cash was only there partly because Rivian raised nearly $3 billion in 2023, too.

If the disinflation seen in the CPI report helps lead to interest rate cuts, any of Rivian’s additional capital needs would come at a lower cost. That’s critical as the company continues to ramp up its business.

The other piece of news — that the E.U. will impose a tax of up to 38% on imported Chinese EVs determined to be unfairly subsidized — could mean additional sales for Rivian in Europe as it increases production levels.

Neither bit of news helps Rivian’s business today, but investors looking down the road should feel good about it.