Rivian Stock Soared Today: Is the Market Overreacting?
Investors have been keen on Rivian Automotive ( RIVN 12.38% ) over the past two days and have pushed the company’s share price up 11% today alone. The recent share price jump is a welcomed change after the electric vehicle (EV) stock plummeted 64% over the past three months.
Investors are likely pushing Rivian’s stock higher as other EV stocks — mainly Chinese automakers — are rising today. Some investors may also be still processing the news that Rivian just hired a chief operations officer to help the company ramp up its vehicle production.
But are those two bits of news worthy of investors’ renewed optimism in Rivian? Probably not on their own.
First of all, just because a few Chinese EV stocks are seeing gains today doesn’t mean much for Rivian’s underlying business. These Chinese stocks — which include Nio, XPeng, and Li Auto — are all rising as the U.S. and China appear to be working together to ensure that Chinese stocks don’t get delisted from U.S. stock exchanges.
The Security and Exchange Commission (SEC) recently said that a few Chinese stocks could potentially be delisted because they weren’t complying with some financial reporting rules. Chinese stocks fell sharply across many sectors as a result, but now it appears that the worst-case scenario won’t happen, and Chinese stocks are skyrocketing as a result today.
So what does that have to do with Rivian? Not much. Investors are just responding to the fact that other EV stocks are rising, but the share price jump doesn’t have much to do with the state of the overall EV market.
Second, while it’s good to see that Rivian is focusing on its operations and production by hiring veteran automotive executive Frank Klein earlier this week, Klein won’t start in his role until June 1.
Investors will likely have to wait several quarters before seeing any tangible results from the hire or gauging how well the company is able to scale its vehicle production.
So, while investors aren’t wrong to be optimistic about the recent news, they should also remember that EV stocks are pretty volatile right now. That doesn’t mean Rivian can’t be a good long-term investment; it just means that investors may want to temper some of their expectations for the time being.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis – even one of our own – helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.