Many aggressive growth stocks are rising Thursday as Treasury yields drop and investors anticipate Federal Reserve rate cuts ahead. But shares of electric vehicle maker Rivian Automotive (RIVN 6.10%) are rising for another reason, too.
Rivian shares spiked as much as 10.6% Thursday morning, settling to a gain of 7% as of 10:45 a.m. ET.
New fleet customer
The news helping to boost the stock was the announcement of a new pilot deal with media giant AT&T for Rivian's electric commercial vans and trucks. AT&T will begin adding the Rivian van and R1 platform trucks to its fleet early next year. The program is meant to enable AT&T to "begin evaluating the various ways these vehicles help improve safety, reduce costs and cut its carbon footprint."
The deal is especially significant for Rivian because it marks the first new customer for its commercial vans beyond Amazon. Rivian has been delivering vans to Amazon for an exclusive 100,000-vehicle order.
But Rivian announced the exclusivity component was ending when it reported third-quarter earnings in early November. Today's announcement marks the first new customer deal for the electric vans.
Tailwinds ahead
Rivian shares have surged about 30% over the last month since that third-quarter report. Investors became more optimistic about the stock's potential after Rivian boosted its 2023 production guidance and due to a lower interest rate environment.
Treasury yields have dropped as the Fed signals the end to the interest rate hike cycle. Many now expect rate cuts in 2024. That's good news for aggressive growth stocks like Rivian that will likely continue to need more capital to grow.
Today's news is yet another tailwind for Rivian. It will begin construction on a new manufacturing plant early next year. The pilot program with AT&T for Rivian commercial vans could be a sign that demand beyond Amazon for its commercial offerings will help fill that plant. That's why aggressive investors might want to own some Rivian stock now.
