What happened
Shares of electric truck manufacturer Rivian (RIVN 3.40%) rallied 13.3% this week through Thursday trading, according to data from S&P Global Market Intelligence.
Rivian made an interesting announcement regarding the range achieved with its new Enduro drive units on Wednesday. In addition, booming sales from a Chinese electric vehicle (EV) peer lit a fire under the stocks of U.S. EV companies on Tuesday, and positive news on inflation helped as well.
NASDAQ: RIVN
Key Data Points
So what
On Tuesday, the U.S. Labor Department released the July jobs report. It showed a big drop in job openings in July from June, and revised the June numbers downward.
Why would that be a good thing? Because the U.S. still has an inflation problem, with many more job openings than unemployed people. That has led to surging wages, and therefore services inflation. So theoretically, lower job openings could bring wage and broader inflation down.
That could enable the Fed to stop raising interest rates and potentially even lower them, which would be a relief for long-duration assets, such as growth stocks like Rivian. Growth stocks tend to have the bulk of their profit power far out into the future, and some growth companies might also need to raise more capital to grow.
Both of those factors are harmed by high rates, and both apply to Rivian, so along with many other technology stocks, it rose on Tuesday on that news.
Tuesday also saw blockbuster results from Chinese EV maker BYD (BYDDY 1.87%), which posted 72% revenue and 205% profit growth last quarter, which impressed investors. BYD's expanding margins and profitability seemed to encourage EV investors that it is actually possible for a non-Tesla (TSLA +0.42%) brand to reach profitability.
Rivian investors will likely have to wait longer for its bottom line to get into the green, however. The company had a massive $1.3 billion operating loss last quarter, as management invests in scaling up production.
Image source: Getty Images.
Then on Wednesday, Rivian announced that its R1T electric pickup truck achieved a 410-mile range when equipped with the company's new Enduro dual-motor drive unit. Enduro has been highlighted by management as a breakthrough in performance that also uses fewer parts and therefore lowers costs.
Going 400-plus miles in a heavy-duty pickup truck is a pretty good milestone; but there are caveats. Rivian's RT1 only achieved those results with the highest-end specs, including the Max battery pack and 21-inch wheels, which cost more. When paired with its Large pack, the R1T's range dropped to 352 miles. With 22-inch wheels and a Large pack, the range dropped further to 341 miles.
That's still pretty good when compared with the Tesla (TSLA +0.42%) Model X, which only has up to 348 miles of range at its highest specs. However, Tesla's upcoming Cybertruck promises up to 500 miles of range, although it is just beginning production and isn't available yet.
Now what
Rivian pursuing its in-house Enduro motor unit is probably a smart strategy, as vertical integration will help lower costs of expensive EVs, while also creating more brand differentiation if the engineering feat succeeds.
But that pursuit is costly, as Rivian's large operating losses show. Still, the prospect of lower interest rates and important technology milestones helped spur more optimism for this high-risk growth stock this week.
