Rivian Automotive Inc (RIVN.O) witnessed a substantial drop in its stock value, plummeting over 20% on Thursday, marking its most significant daily percentage decline since May of the previous year. This decline was triggered by the company’s recent revelation of its intent to issue $1.5 billion in convertible green bonds.
Based in Irvine, California, Rivian disclosed that these bonds, set to mature in October 2030, offer investors the option to convert them into either cash or company shares. The primary objective behind this move, as conveyed by a company spokesperson to Reuters on Wednesday, is to mitigate risks associated with the forthcoming launch of the R2 sports utility vehicle in Georgia.
This marks the second occasion in less than a year that Rivian has chosen to pursue green bond issuance. These green bonds are designed to attract capital from investors keen on supporting environmentally-conscious initiatives. In March, the company had successfully issued a $1.3 billion convertible green bond to aid in the launch of its smaller R2 vehicle family.
During the trading session, Rivian’s stock experienced a sharp decline, plummeting to as low as $18.83, ultimately marking a 20.5% drop. Year-to-date, the stock has registered a modest 4% increase, but it closed down 19.5%.
Elliot Johnson, Chief Investment Officer at Evolve ETFs, which manages over $5.2 billion in assets, including investments in electric vehicle startups like Rivian, commented on the situation, stating, “The capital raise has occurred earlier than anticipated. Considering that they are not producing more vehicles than expected, earnings are in line, and the accelerated cash infusion may potentially dilute the value, this move raises concerns. Rivian is still perceived as a speculative business.”
Rivian, backed by e-commerce titan Amazon (AMZN.O), has been aggressively spending funds to expand production and compete with market leader Tesla (TSLA.O), which has been implementing price cuts. In the third quarter, Rivian outperformed expectations by manufacturing 16,304 vehicles and delivering 15,564 vehicles to customers. The company is on track to achieve a total delivery of 52,000 vehicles by year-end.
According to LSEG data, Rivian has projected that its revenue will surge to approximately $1.33 billion, more than doubling from the previous year, aligning with analysts’ estimates.
As of September 30, Rivian’s cash reserves stood at approximately $9.1 billion, down from $10.2 billion in June. In August, Rivian’s Chief Executive, Robert Scaringe, expressed confidence that the company possesses sufficient funds to sustain operations through 2025, as they diligently manage expenses.
Photo Source: Fox
5th October, 2023
Delino Gayweh
Serrari Financial Analyst
Article and News Disclaimer
The information provided on www.serrarigroup.com is for general informational purposes only. While we strive to keep the information up to date and accurate, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability, or availability with respect to the website or the information, products, services, or related graphics contained on the website for any purpose. Any reliance you place on such information is therefore strictly at your own risk.
www.serrarigroup.com is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information on the website is provided on an "as-is" basis, with no guarantee of completeness, accuracy, timeliness, or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including but not limited to warranties of performance, merchantability, and fitness for a particular purpose.
In no event will www.serrarigroup.com be liable to you or anyone else for any decision made or action taken in reliance on the information provided on the website or for any consequential, special, or similar damages, even if advised of the possibility of such damages.
The articles, news, and information presented on www.serrarigroup.com reflect the opinions of the respective authors and contributors and do not necessarily represent the views of the website or its management. Any views or opinions expressed are solely those of the individual authors and do not represent the website's views or opinions as a whole.
The content on www.serrarigroup.com may include links to external websites, which are provided for convenience and informational purposes only. We have no control over the nature, content, and availability of those sites. The inclusion of any links does not necessarily imply a recommendation or endorsement of the views expressed within them.
Every effort is made to keep the website up and running smoothly. However, www.serrarigroup.com takes no responsibility for, and will not be liable for, the website being temporarily unavailable due to technical issues beyond our control.
Please note that laws, regulations, and information can change rapidly, and we advise you to conduct further research and seek professional advice when necessary.
By using www.serrarigroup.com, you agree to this disclaimer and its terms. If you do not agree with this disclaimer, please do not use the website.
www.serrarigroup.com, reserves the right to update, modify, or remove any part of this disclaimer without prior notice. It is your responsibility to review this disclaimer periodically for changes.
Serrari Group 2023
