What Happened?
Shares of electric vehicle manufacturer Rivian (NASDAQ: RIVN) jumped 2.8% in the afternoon session after analysts reacted positively to its inaugural "Autonomy & AI Day," where it revealed plans for a custom-designed processing chip and a new subscription service for its self-driving features.
The electric vehicle maker announced it was developing its own proprietary chip, the Rivian Autonomy Processor, reducing its reliance on outside suppliers. This move signaled a strategic shift toward making more of its own key technology. The company also unveiled a new subscription service called 'Autonomy+' for its hands-free driving package, creating a new stream of revenue. This service was priced at a $2,500 one-time fee or $49.99 per month.
Following the event, several analysts expressed increased confidence in the company's strategy, with some raising their price targets on the stock.
After the initial pop the shares cooled down to $19.28, up 4.4% from previous close.
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What Is The Market Telling Us
Rivian’s shares are extremely volatile and have had 32 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 14.1% on the news that the company announced ambitious plans for autonomous driving technology, including a proprietary AI chip, during its inaugural Autonomy & AI Day.
The new in-house chip, named the Rivian Autonomy Processor, was designed to power its future self-driving features, replacing processors from Nvidia in upcoming vehicles. By developing its own custom silicon, the company aimed to reduce dependence on outside suppliers. Rivian also unveiled a new paid driver-assistance package called Autonomy+, priced at $2,500 as a one-time payment or $49.99 per month, which was significantly below the cost of Tesla's competing system.
Following the announcements, analysts reacted positively, with brokerage Needham and Co raising its price target on the stock by 64% to $23 per share.
Rivian is up 45.5% since the beginning of the year, and at $19.28 per share, has set a new 52-week high. Investors who bought $1,000 worth of Rivian’s shares at the IPO in November 2021 would now be looking at an investment worth $191.35.
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