What's Going On With Rivian (RIVN) Stock?

Shares of Rivian Automotive Inc RIVN gained some 2.25% to $13.19 Thursday afternoon, following the Federal Reserve's unexpected decision Wednesday to cut interest rates by 50 basis points at its September Federal Open Market Committee (FOMC) meeting.

The rate cut lowers the federal funds rate to a range of 4.75% to 5%, marking the first cut in over four years and signaling a more aggressive monetary easing cycle than previously anticipated.

This policy shift has major implications for Rivian, a leading electric vehicle (EV) manufacturer, and its investors, who are now more optimistic about the company's financial outlook and growth potential.

Lower Borrowing Costs to Drive Rivian's Expansion

As a capital-intensive company, Rivian relies heavily on external funding to scale its operations, build out production capacity, and develop new technologies. The larger-than-expected rate cut reduces Rivian's future borrowing costs, which is critical for a company still in its growth phase.

Lower interest rates make it cheaper for Rivian to finance key initiatives, such as the expansion of its manufacturing facilities, particularly its flagship plant in Normal, Illinois, and the ramp-up of production for its R1T electric pickup truck and R1S SUV.

Read Also: Tesla Bull Explains Why Elon Musk’s xAI Is Critical To EV Maker’s Autonomous Ambitions

With the Federal Reserve projecting more rate cuts in the coming years—bringing the federal funds rate down to 2.9% by 2026—Rivian stands to benefit from an extended period of favorable financing conditions.

Lower capital costs improve the company's ability to fund large-scale investments in EV infrastructure and battery development, both of which are essential to maintain its competitive edge in the rapidly evolving EV market.

Increased Consumer Demand Expected for Rivian's EVs

Beyond Rivian's corporate financing, lower interest rates are expected to stimulate consumer demand for electric vehicles. With the cost of auto loans likely to decrease alongside the Fed's interest rate cuts, consumers may find it more affordable to purchase higher-priced EV models, like Rivian's R1T and R1S.

As the EV industry grows and consumer preferences shift toward greener alternatives, Rivian is well-positioned to capture a larger share of the market.

In addition, lower interest rates could lead to a broader economic boost, potentially raising disposable income for consumers. This macroeconomic improvement aligns with Rivian's long-term goal of increasing sales volume and market penetration, especially as it scales production to meet growing demand.

Read Also: Wall Street Breaks Records, Chipmakers Rally, Tesla Hits 2-Month High As Fed Cut Drives Risk-On Mode: What’s Driving Markets Thursday?

Is RIVN A Good Stock To Buy?

An investor can make a few decisions when deciding whether a stock is a good buy. In addition to valuation metrics and price action which you can find on Benzinga's quote pages – like Rivian Automotive‘s page for example – there are factors like whether or not a company pays a dividend or buys a large portion of its stock each quarter.

These are known as capital allocation programs. Rivian Automotive does not pay a dividend, but obviously has a few ways it can return value to shareholders. Feel free to search Benzinga's dividend calendar for the next company that is due to pay a dividend and determine what kind of yield you can earn for holding a share of the company.

Buyback programs are obviously different and highly variable. A company can approve a buyback program and purchase shares as it sees fit over the course of time in which the buyback was authorized. Looking through the latest news on Rivian Automotive will often yield whether or not the company has approved a buyback program recently. Buyback programs usually serve as a support for share prices, serving as a backstop for demand.

According to data from Benzinga Pro, RIVN has a 52-week high of $24.87 and a 52-week low of $8.26.