Rivian Automotive witnessed a significant decline in its stock value on Thursday, catching investors off guard with a sudden announcement of its intent to issue $1.5 billion in convertible notes. Simultaneously, the company unveiled a preliminary estimate of its third-quarter revenue that closely aligned with Wall Street‘s projections. Consequently, Rivian’s shares plummeted, ultimately closing down by more than 22% on the same day.
In a regulatory filing made late on Wednesday, Rivian outlined its anticipation for third-quarter revenue to fall within the range of $1.29 billion to $1.33 billion. This forecast closely mirrored Wall Street’s consensus estimate of approximately $1.3 billion, as reported by LSEG, formerly known as Refinitiv.
Rivian also disclosed that it held cash and equivalents amounting to $9.1 billion as of September 30, representing a decrease from the $10.2 billion reported at the close of the second quarter.
Throughout the year, Rivian had taken proactive measures to curtail spending and fortify its financial position. These measures included a 6% reduction in its workforce in February and a subsequent $1.3 billion sale of convertible notes in March. Additionally, the company had postponed the launch of its forthcoming R2 vehicle platform, pushing it from 2025 to 2026. Despite these prior actions, the latest announcement of the $1.5 billion convertible notes offering took investors by surprise.
Rivian’s plan revolves around issuing $1.5 billion worth of senior, unsecured “green” convertible notes maturing in 2030. Furthermore, buyers will have the option to acquire an additional $225 million worth of notes, as per the company’s statement.
On a positive note, Rivian recently reported third-quarter delivery figures that exceeded Wall Street’s expectations. The electric vehicle manufacturer is scheduled to disclose its third-quarter earnings after the U.S. markets close on November 7th.
