Shares of Rivian Automotive Inc (RIVN.O) experienced a significant drop of nearly 23%, the largest decline since their debut in 2021, after the electric vehicle manufacturer announced plans to issue $1.5 billion in convertible green bonds. This move is aimed at mitigating the risks associated with the launch of their R2 sports utility vehicle in Georgia. Rivian had previously issued a $1.3 billion convertible green bond in March to support the introduction of their smaller R2 vehicle family. The recent announcement of the bond issuance occurred earlier than expected, leading to concerns among investors about dilution and cash flow. Rivian, backed by Amazon (AMZN.O), has been facing high cash burn as it strives to increase production and keep up with Tesla Inc (TSLA.O). Although Rivian exceeded expectations in the third quarter by producing 16,304 vehicles and delivering 15,564 to customers, the company’s projection of delivering 52,000 vehicles this year disappointed some investors and analysts who anticipated a higher production target. Rivian expects third-quarter revenue of up to $1.33 billion, double the amount compared to the same period last year. As of September 30, Rivian had approximately $9.1 billion in cash on its balance sheet. However, concerns about the company’s ongoing cash burn and future expenses associated with its new manufacturing facility in Atlanta have led analysts to maintain a “sell” rating on Rivian shares. Despite the stock’s decline, some investors view the bond issuance as a prudent move, anticipating potential market tightening. The median price target for Rivian’s shares among analysts is currently $30, with a “buy” recommendation.
EV maker Rivian shares have record drop after convertible bond offering launched
/cloudfront-us-east-2.images.arcpublishing.com/reuters/DDYMQGNBZRJLRG6PAAS6PQ4VXE.jpg "EV maker Rivian shares have record drop after convertible bond offering launched")
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