Why Rivian Stock Popped, Dropped, Then Recovered Today

Investors are digesting a flurry of news surrounding electric vehicle (EV) maker Rivian Automotive (NASDAQ: RIVN). It seems the market doesn't know what to make of the mixed bag of information either.

Rivian shares jumped as much as nearly 6% early today before turning negative by 3%. As of 10:55 a.m. ET, the stock had recovered and was trading higher by 3.2%.

Rivian's capital influx

The big news from the EV start-up today was a commitment for a conditional loan of up to $6.6 billion from the U.S. Department of Energy (DOE). That funding, coming through a DOE manufacturing loan program, would help the company with the construction of a planned new production plant in Georgia.

Rivian has paused those construction plans as it works to conserve capital while ramping up production of its electric SUVs, pickup trucks, and delivery vehicles. It comes after the company recently announced investments of up to $5.8 billion from Volkswagen Group.

Rivian still had nearly $8 billion in cash and equivalents, as of June 30. That includes $1 billion from a convertible note issued to Volkswagen as part of that agreement. But the company is preparing to begin construction of its next-generation R2 model next year and plans a future R3 model beyond that.

Those plans are capital intensive, so the influx of funding is welcome news and explains the early pop in the stock today. The company will begin producing the R2 at its existing Illinois facility, but the new Georgia plant is expected to significantly bolster Rivian's capacity by as much as 400,000 units annually.

The first phase of that plant won't begin production until 2028, though. And much can happen in the intervening years. That includes uncertainty related to EV tax credits with a new administration taking over next year. News that California could offer its own tax credits should the Trump administration cancel existing credits helped boost Rivian stock yesterday.

While uncertainty remains, the new loan commitment is a positive development for the company, and why investors ultimately pushed the stock higher today.

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Howard Smith has positions in Rivian Automotive. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.