Rivian’s Stock Falls as Company Announces $1.5 Billion Green Bond Offering

Rivian Automotive Inc, the electric vehicle maker backed by Amazon, experienced a significant drop in its stock price after announcing plans to issue $1.5 billion worth of convertible green bonds. The bonds, which mature in October 2030, will provide Rivian with additional capital to “de-risk” the launch of its R2 sports utility vehicle in Georgia.

The news of the bond offering caused Rivian’s shares to fall by nearly 23%, marking the largest daily percentage decline since the company’s debut in 2021. The stock closed at $18.27, reaching a three-month low. Since its initial public offering in November 2021, Rivian’s shares have dropped 77% from its IPO price of $78.

Investors expressed concerns about the timing of the bond issuance, as it came earlier than expected. Some worry that the additional cash flow could be dilutive, considering Rivian is still seen as a speculative business. However, others believe it was a prudent move to secure funds in a potentially tightening market.

Rivian has been burning through cash as it ramps up production to compete with market leader Tesla Inc, which has been slashing prices. In the third quarter, Rivian exceeded estimates by producing 16,304 vehicles and delivering 15,564 vehicles to customers. However, the company’s projection of delivering 52,000 vehicles this year disappointed investors and analysts who were expecting a higher production target.

Despite the stock decline, Rivian remains optimistic about its financial performance. The company expects third-quarter revenue of up to $1.33 billion, double the amount from the previous year and in line with analyst estimates. As of September 30, Rivian had approximately $9.1 billion in cash on its balance sheet.

While some analysts maintain a cautious outlook on Rivian’s financial situation, with concerns about its ongoing cash burn and the cost of its new manufacturing facility in Atlanta, others believe the company has enough liquidity to sustain its operations through 2025.

The current median price target for Rivian’s shares, according to analysts, is $30, with a “buy” recommendation. The company’s focus on electric vehicles and its partnership with Amazon continue to generate interest and support from investors.

In conclusion, Rivian’s announcement of a $1.5 billion green bond offering has led to a significant decline in its stock price. However, the company remains confident in its financial outlook and expects strong revenue growth in the third quarter. With ongoing production and delivery of its electric vehicles, Rivian aims to establish itself as a key player in the EV market.