Rivian Faces Record Stock Drop Due to Convertible Stock Plan

Imagine a hot new star suddenly facing a stumble on the stage. That’s what happened to Rivian, the electric vehicle (EV) heavyweight that recently faced a record 23% stock drop in a single day since its 2021 debut.

What caused this wobble? A cocktail of a $1.5 billion convertible green bond announcement and a slight miss in their Q3 sales forecast. Let’s dive into the details, unpacking the buzz for all you budding investors and EV enthusiasts.

Rivian’s Financial Rollercoaster

So, Rivian planned to roll out $1.5 billion in convertible green bonds, essentially loans that can transform into shares later on. Sounds fancy, right? But this raised eyebrows among investors. Why? Because it might dilute the value of their current shares. It’s like having a pizza and suddenly being told you need to share it with more people.

READ: TESLA ADJUSTS MODEL 3, Y PRICING AFTER MISSING DELIVERY TARGETS

This isn’t the first time Rivian has done this either; earlier this year, they reportedly issued a $1.3 billion bond for their R2 vehicles. Then came another hiccup. Rivian’s sales forecast for Q3 was a bit lower than what the experts predicted. However, it’s not all gloom and doom. The company did see a 23% boost in deliveries from their last quarter.

The EV Market’s Bumpy Ride

Rivian isn’t alone in facing market tremors. EV companies are navigating a dynamic landscape, with some, like Lucid Group, seeing their value drop by 64% in a year!

Tesla, however, seems to be riding high with a 134% stock rise this year, even though they faced challenges like factory shutdowns. Unlike its rivals, Rivian hasn’t been slashing its prices. Companies like Tesla and Volkswagen are offering deals left and right, especially in the U.S., Europe, and China.

Looking Ahead

Rivian’s Path Forward For many, Rivian’s decision to issue a convertible green note seems puzzling. Is it a cry for help or just a strategic move? Since hitting the scene with a bang through their IPO, Rivian’s journey has been more of a steady walk than a sprint.

EVs aren’t cheap to produce, and the company’s latest moves have left some scratching their heads. But let’s pause and see the silver lining. Rivian’s Q3 results, though not stellar, still show progress. It’s like acing a test after just passing the last one. The company’s CEO, RJ Scaringe, assures everyone that they’ve got enough cash to keep going till 2025.

The Road Ahead for Rivian In the fast-paced world of EVs, bumps in the road are expected. Rivian’s recent challenges don’t mean it’s game over. It highlights the teething problems startups often face. With its eyes set on future growth and an optimistic CEO at the helm, Rivian is poised to navigate these challenges and cement its place in the electric vehicle revolution.

Photo courtesy of Rivian.

Haye Kesteloo
Haye Kesteloo

Haye Kesteloo is the Editor in Chief and Founder of EVXL.co, where he covers all electric vehicle-related news, covering brands such as Tesla, Ford, GM, BMW, Nissan and others. He fulfills a similar role at the drone news site DroneXL.co. Haye can be reached at haye @ evxl.co or @hayekesteloo.

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