American electric vehicle manufacturer Rivian (RIVN) shares are trading more than 10% higher on Wednesday.
The American EV manufacturer has had a tough year with shares down 55% due to soft demand for EVs in the U.S.. The company has also been plagued by production disruptions linked to component shortages.
Today, the stock took a turn higher after appositive development in its recently announced partnership with Volkswagen Group (VWAGY).
This morning Rivian announced revised terms in its agreement with Volkswagen. The deal, originally valued at $5.0 billion, has increased to $5.8 billion. The increase is both a monetary boost and significant endorsement of Rivian's technology and future prospects in the EV market.
Under the partnership, Rivian and Volkswagen will co-develop new electric vehicles that incorporate Rivian’s software architecture into VW’s models. The venture is set to launch with the a first vehicle in 2027.
The news comes at a crucial time for Rivian after the substantial net cash burn of $876 million in its most recent earnings report.
Rivian believes that the financial injections from Volkswagen will pave the way to achieving positive free cash flow.
The announcement comes at a critical time for the stock.
Shares of Rivian were flirting with a break back below $10, a psychologically significant price.
In April, shares of Rivian crossed this critical support ahead of an increase of selling pressure that dropped shares to nearly $8. The stock overcame that weakness following positive news from the company’s management.
Shares will need to overcome technical resistance from their bearishly biased 200-day moving average to continue higher. That trendline currently sits at $12.25.
Rivian shares remain in a long-term bearish trend with a price target of $8.
Spotify (SPOT) stock rallied more than 11% as the company posted its third quarter of profitability, despite the company’s latest earnings miss.
Spotify's third-quarter earnings report painted a mixed financial picture. For its third quarter, Spotify reported an EPS of €1.45, missing analyst projections, but this was eclipsed by the robust growth in both Monthly Active Users (MAUs) and premium subscribers.
The company ended the quarter with 640 million MAUs, a jump of 11% year-over-year and a slight increase from their previous forecast of 639 million.
Like other streaming services like Netflix (NFLX) growth was primarily driven by Spotify's ad-supported tier, which is popular among users but currently faces a challenging advertising market. That challenging market led to slower revenue growth.
Premium subscribers, a critical metric for Spotify's financial health, increased by 12% year-over-year to reach 252 million. That number surpassed the company's expectations by one million users.
Premium user growth came even as Spotify implemented price hikes, which typically deter new subscriptions. Instead, it contributed to an acceleration in premium average revenue per user (ARPU) growth, which increased by more than 1% from last quarter.
Despite the positives, revenue for the quarter grew by 18.8% year-over-year, slightly missing expectations.
Looking ahead, Spotify anticipates these challenges to continue, projecting Q4 revenues to grow by only 12% year-over-year, reflecting the ongoing impact of currency fluctuations.
Investors drove the stock higher on its growth potential. Spotify's outlook is positive with projected MAU and premium subscriber growth in Q4.
Today’s rally shot Spotify stock through the $450 as shares have been benefiting from strong technical momentum.
The stock has pressed into short-term overbought conditions, suggesting that a mild correction or consolidation is likely. Such a pullback would be viewed as a “buy the dip” opportunity for investors.
Cisco (CSCO) kicked off its fiscal year 2025 on a high note.
After the close on Wednesday, the networking giant announced earnings that surpassed analyst expectations.
In its Q1 report, Cisco posted earnings of $0.91 per share. That number is better than Street estimates of $0.04. This represents more than 21 quarters in a row that the company has exceeded their earnings target.
The earnings came on lighter than expected revenue. For the quarter, top line revenue was lower by 5.6% year-over-year to $13.84 billion. That number matched expectations.
The company’s performance is underpinned by a notable improvement in non-GAAP operating margins, which reached 34.1%, surpassing the company’s earlier projections of 31-32%.
Despite a 9% decline in product revenue, Cisco saw a 6% increase in services revenue. One standout was the robust growth in the Security and Observability segments, which surged by 100% and 36%, respectively, highlighting areas of emerging strength within Cisco's portfolio.
Cisco’s management issued guidance for Q2 with expected EPS between $0.89 and $0.91, and projecting revenues to remain stable. For its fiscal year 2025, Cisco forecasts earnings between $3.60 and $3.66 per share.
Shares of Cisco stock traded almost 7% higher in the week headed into its earnings report. The rally took shares into a short-term overbought reading. This signals that short-term traders may begin to take profits after the earnings call.
Cisco is trading with positive momentum from both long- and short-term perspectives.
Investors should expect to see technical support for Cisco shares at $55 as the stock remains a long-term bull with a price target of $70.
