Rivian Automotive (NASDAQ:RIVN) has been on a winning streak lately. A spate of positive developments has really moved the needle for Rivian stock over the past two months.
The EV maker may not even be done with its extended rebound in price. An upcoming event could give the summer rally further momentum. However, while there’s been positive news aplenty for Rivian lately, that may not be the case in the coming months.
There’s another factor on the horizon that could be a big negative for shares. I’m talking about politics, specifically, the upcoming U.S. Presidential election, which might not be fully factored into RIVN’s valuation.
With this in mind, let’s take a closer look, and see why politics may just well lead to a big reversal for RIVN shares.
Extra Range for the Rivian Stock Rally
Rivian shares have rallied by nearly 60% in the past month. The reasons for this have been twofold. Pretty soon, the reasons for this rally could become threefold. As you likely know, the initial driver of the RIVN recovery was the company’s announcement of a strategic partnership with Volkswagen (OTCMKTS:VWAGY).
Many positives are likely to arise from this partnership. However, it’s the fact that the deal provides this fast-growing yet cash-burn electric truck and van maker with as much as $5 billion in additional funding that kicked Rivian stock back into high drive starting on June 25.
In early July, RIVN surged again. This time, due to the release of Rivian’s latest quarterly delivery numbers. Deliveries during Q2 2024 came in at 13,790 vehicles. This number came in over 1,000 units ahead of Wall Street forecasts.
Shares have sold off slightly since then. Within a few weeks, though, the market may again have a reason to be very bullish.
Post-market on Aug. 6, Rivian will release its latest quarterly results. If the company reports better-than-feared net losses, or provides positive guidance updates, this may be enough to keep shares trending higher after earnings.
How the Election Could Affect Price Performance
Right after the first U.S. Presidential debate in June, momentum started making a strong shift from President Joe Biden to Republican nominee Donald Trump. In turn, leading to a resurgence in the “Trump Trade.” However, now, with Biden’s exit from the race, the “Trump trade” could be coming to an end.
In theory, that may be good news for EV plays, Rivian stock included. A second Trump administration could bring an end to federal tax incentives for EV buyers.
It also could end the so-called “EV mandate,” which provides automakers incentive to continue the transition to electric.
However, Biden’s exit, with Vice President Kamala Harris now the presumptive Democratic Party nominee, may not mean momentum is shifting back to the Democrats.
If Trump polls as well against Harris as he did against Biden, and performs well in subsequent debates, he could remain the favorite.
The “Trump Trade” could resume, only this time placing greater pressure on EV stocks. If, this fall, the Republicans secure an electoral victory, this may lead to a further sell-off in vehicle electrification plays such as RIVN.
Tread Carefully, as the RIVN Rally is Built on Wobbly Ground
Admittedly, it’s possible that things do indeed shift the other way in the months ahead. The Democrats regain momentum, helping to prevent the emergence of concerns that policies favorable to the EV space are ending.
However, this potential risk is just one of many examples of how the Rivian rally may be built on shaky ground. Even if politics fails to knock down RIVN, more company-specific negatives could come off the back burner in the coming months.
For instance, as InvestorPlace’s Rich Duprey recently argued, it’s unclear whether the launch of lower-priced vehicles will lead to a continued Rivian sales resurgence.
Duprey also pointed out that, in the months ahead, the EV maker could fail to demonstrate that it’s finally on the path toward profitability.
Considering both these more direct factors alongside indirect factors like politics, it’s easy to see how shares could fully give back their recent gains between now and year’s end.
With this, treading carefully with Rivian stock may be the best course of action.
On the date of publication, Thomas Niel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) and positions in the securities mentioned in this article.