Rivian Automotive (RIVN 1.70%) shares jumped as much as 5.4% Monday morning after an eventful weekend for the company. The move higher looks to be a bit of a relief rally on two fronts.
As of 12:20 p.m. ET, shares of the electric vehicle (EV) maker remained higher by 2.6%. The move comes after reports that a fire at the company's sole manufacturing facility over the weekend damaged multiple electric vehicles but no assembly equipment. No injuries were reported.
Rivian plant fire not too damaging
The news that only vehicles were harmed was certainly a relief for investors. Rivian has been working to retool some of that facility in preparation for the launch of its critical second-generation R2 EV.
Investors anticipating a successful launch of the more moderately priced R2 have driven Rivian shares up nearly 40% in the last several months. And the macroeconomic environment has also boosted optimism among investors.
For some, that optimism is also a bit tepid, as it's not yet clear if Rivian has enough cash on hand to get to the point where the R2 model begins to bring in meaningful revenue. But that is where the other tailwind for the stock comes from.
Last week, Federal Reserve Chairman Jerome Powell publicly indicated the committee was ready to begin cutting interest rates soon. Lower interest rates would enable growing early-stage companies like Rivian to more cheaply raise needed capital.
It's not clear whether Rivian will again have to tap capital markets. But interest rate cuts will provide a cushion if it has to. That's likely the reason for the stock jump today -- though news that the fire didn't damage production equipment was also a relief for shareholders.
