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Why is the stock of Rivian Automotive Inc. (RIVN) rising today?
RIVN, being an electric vehicle (EV) business, had its stock price soar this morning despite the lack of any apparent company specific news.
All of this has prompted some shareholders to be more cautious with their investments and sell some of their stock positions, causing the S&P 500 to fall 3.7% in the last three months. However, given RIVN's rapid decline in stock price, some investors may now consider the company's shares to be undervalued. RIVN's stock, for example, debuted on the market in November for $78 a share but now trades for around $23 per share, despite today's gains. Some investors may also be responding to news that Tesla Inc. (TSLA) plans to divide its stock again, which was released yesterday. The electric vehicle company's stock was last divided in August 2020 and its share price has more than quadrupled since then.
While the possibility of TSLA dividing its stock has nothing to do with RIVN, investors typically become excited when another firm in the same field gains traction. As a result, current interest in TSLA's stock might have a spill over impact on other EV manufacturers, such as RIVN.
RIVN's supply chain is still constrained and growing inflation has caused the business to raise car costs. These present roadblocks have delayed the company's growth but long-term investors should keep a watch on it. RIVN's entry into the electric pickup truck market might help it carve out a niche at a time when other electric vehicle startups are still figuring things out. RIVN faces a difficult road ahead but with the electric vehicle market still in its infancy, it has plenty of opportunity to establish itself.
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