Rivian Sinks After EV Maker Plans Convertible Note Offering

Rivian Automotive Inc. sank after the electric-vehicle maker announced plans to issue $1.5 billion in convertible debt and reported preliminary third-quarter revenue.

(Bloomberg) — Rivian Automotive Inc. sank after the electric-vehicle maker announced plans to issue $1.5 billion in convertible debt and reported preliminary third-quarter revenue. 

The Irvine, California-based company said in a securities filing Wednesday that it plans to offer green convertible senior notes due in 2030 as a private offering to qualified institutional buyers. It granted the purchasers an option to buy an additional $225 million. 

The cash raise came “much earlier than we expected,” but in line with expectations, Chris McNally, an analyst at Evercore ISI with an outperform rating on the stock, wrote in a research note Thursday.

Rivian estimated its cash, cash equivalents and short-term investments totaled $9.1 billion as of quarter-end, down from $10.2 billion in the second quarter. Evercore said that cash burn rate was in line with its projections. 

The EV maker’s shares fell 11% at 9:30 a.m. in New York, their biggest intraday drop since March 7. The stock had risen about 29% this year as of the close on Wednesday. 

Rivian also said it expects revenue for the three months ended Sept. 30 in a range of $1.29 billion to $1.33 billion, compared with a $1.3 billion average estimate from analysts surveyed by Bloomberg.

The bond issuance, which could dilute the current shareholders’ interests, comes after the company disappointed investors earlier this week by maintaining its full-year guidance for producing 52,000 battery-electric vehicles this year.

Rivian manufactures two consumer models and a plug-in delivery van for Amazon.com Inc., its biggest shareholder. It’s a front-runner in a large pack of startups chasing market incumbent Tesla Inc., but has struggled with supply-chain challenges and a slow ramp since its November 2021 initial public offering.

Rivian plans to release its official financial results for the third quarter on Nov. 7.

(Updates shares in fifth paragraph.)

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