Why Shares of Rivian Raced Out of the Gate Today

What happened

The Fourth of July is over, but the fireworks continued this morning for shares of Rivian Automotive (NASDAQ:RIVN). As of 1:05 p.m. ET on Wednesday, its stock is up 2.5%, retreating from its earlier rise of 7.6%.

In addition to company-related news that broke after the market closed on Monday, investors are parking the electric truck maker in their portfolios after learning of some positive coverage from Wall Street.

So what

On Monday, Reuters reported that Amazon will begin to deliver packages with the help of Rivian's electric delivery vans (EDVs) in Germany this summer. The 300 vehicles that will appear in the areas surrounding Munich, Dusseldorf, and Berlin are the first EDVs that Amazon is putting to use in Europe. In the U.S., Amazon already has 3,000 EDVs operating in more than 500 cities.

Further powering investors' excitement today, two analysts came out with bullish takes on Rivian's stock. The first, Chris Pierce at Needham, hiked the price target to $28 from $26, maintaining a buy rating. Similarly, Michael Shlisky at D.A. Davidson upgraded the stock to neutral from underperform and raised the price target to $18 from $11.

Now what

The analysts' increasingly optimistic outlook is worth noting, but those who may feel compelled to buy Rivian's stock solely based on this should pump the brakes. Price targets are often set using shorter investing horizons, and they may belie the longer-term prospects for the stock.

The development in Europe, on the other hand, is a concrete achievement. After the company disappointed investors with vehicle production figures in March, investors find it reassuring that the company is succeeding in delivering on its 100,000 EDV order with Amazon. Competition among electric vehicle makers is revving up, and investors want to see that the company isn't succumbing to the rocky road it had encountered earlier in the year.

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