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Rivian stock is up 50%, here’s why

Rivian stock is up 50%, here's why
Elmaz Sabovic

Just as the rest of the electric vehicle (EV) sector, Rivian (NASDAQ: RIVN) recorded a negative performance on a year-to-date basis, losing 43% of its stock value in the process.

But, on June 25, everything changed overnight, as RIVN stock added almost 50% in the pre-market trading on the news of a $5 billion investment from the German automaker Volkswagen (ETR: VOW3).

RIVN stock 24-hour price chart. Source: Google Finance
RIVN stock 24-hour price chart. Source: Google Finance

This gain means that Rivian’s market cap rose by $6 billion in a matter of hours after the announcement. So, what does investment mean for the California-based EV maker?

Volkswagen and Rivian cooperation is a win for both

The investment will provide Rivian with the funding needed to develop its less expensive and smaller R2 SUVs, set to debut in early 2026, and its planned R3 crossovers. 

This support will also help Rivian, known for its flagship R1S SUVs and R1T pickups, to achieve positive cash flow. The company will license its existing intellectual property to the joint venture (JV), and the R2 will be the first vehicle to use software from the JV. 

For Volkswagen, analysts and investors view the investment as a strategy to address the company’s software challenges. VW’s software division, Cariad, established under former VW Group CEO Herbert Diess, has exceeded its budget and failed to meet targets.

Volkswagen will immediately invest $1 billion in Rivian through a note that will convert to stock on December 1, pending regulatory approvals. Volkswagen will also make a $1 billion payment at the JV’s inception, expected in the fourth quarter of this year. 

The German automaker will further invest $2 billion in Rivian stock—$1 billion each in 2025 and 2026—contingent on Rivian meeting certain milestones, and provide a $1 billion loan in 2026.

Technical analysis of RIVN stock

Rivian stock is currently in a declining trend channel in the medium to long term, indicating growing pessimism among investors and suggesting that the stock may continue to fall. 

The stock is testing resistance at $12 as breaking above $12 would be a positive sign, which has been achieved with the pre-market gains. In the short term, the stock is supported by a positive volume balance. 

Additionally, the relative strength index (RSI) curve is trending upwards, signaling a potential trend reversal and a price increase.

Technical analysis of RIVN stock. Source: TradingView
Technical analysis of RIVN stock. Source: TradingView

Overall, the fundamental and technical indicators took a positive turn for RIVN stock, with a bullish outlook in the short to medium term.

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