Rivian, headquartered in Irvine, California, experienced an 11% plummet in shares on Thursday morning, subsequent to their announcement of a $1.5 billion convertible debt offering and the disclosure of preliminary third-quarter revenue. This financial move, detailed in a securities filing on Wednesday, targets qualified institutional buyers with an offering of green convertible senior notes maturing in 2030, along with an option to acquire an additional $225 million.
Chris McNally, an analyst at Evercore ISI, who has given the stock an outperform rating, noted in a research briefing on Thursday that the cash infusion came “much earlier than we expected,” though it aligns with Rivian’s internal projections. As of the quarter-end, Rivian estimated its cash, cash equivalents, and short-term investments at $9.1 billion, marking a decline from the second quarter’s $10.2 billion.
For the third quarter, Rivian had previously anticipated revenues ranging between $1.29 billion and $1.33 billion, a projection that fell short of analysts’ average estimate of $1.3 billion. The bond offering, while a strategic move, raises concerns of potential dilution of shareholder interests, compounding disappointment among investors, who were already disheartened earlier in the week by the company’s steadfast commitment to producing 52,000 battery-electric vehicles in 2021.
Rivian, recognized for manufacturing two consumer models and a plug-in delivery van for major shareholder Amazon.com Inc., is a prominent contender in the competitive arena of electric vehicle startups vying with industry incumbent, Tesla Inc. Despite grappling with supply chain bottlenecks and a sluggish post-November 2021 initial public offering launch, the company witnessed a notable 29% surge in stock prices by the close of trading on Wednesday.
Official financial results for the third quarter are slated for release on November 7th. In terms of financial performance, Rivian’s cash burn rate has closely mirrored projections.
In conclusion, the shares of Rivian face uncertainty amidst the company’s bold financial moves, leaving investors closely monitoring its future performance. The recent upswing in stock prices provides a ray of hope for investors, who were met with disappointing third-quarter financial outcomes. Rivian continues to assert its dominance in the electric vehicle industry, although the surprise $1.5 billion bond offering coupled with diminished revenue figures has sent shockwaves through the shareholder base.