Rivian Automotive's stock experienced a significant decline of 13% in early trading following the announcement of a public offering of 75 million shares of its Class A common stock. This decision to raise capital comes after a recent rise in share price, where Rivian shares had increased by 8.1% on Monday and 19% the previous week.
Based on the closing price of $20.14 per share on Monday, the offering could generate approximately $1.51 billion for the company. Rivian indicated that the proceeds will be utilized for equity contributions related to a loan agreement with the U.S. Department of Energy. Additionally, Rivian has granted underwriters a 30-day option to purchase up to an additional 11.25 million shares.
The capital raise follows Rivian's decision to suspend its plans for achieving profitability by 2027, citing anticipated increases in research and development spending for autonomous and next-generation vehicle technologies. This announcement coincides with the launch of Rivian's new R2 midsize SUV, which the company hopes will contribute to its path toward profitability by the end of the decade.
In a separate filing, Rivian pre-released its second-quarter revenue estimates, projecting between $1.55 billion and $1.65 billion, surpassing the average analyst estimate of $1.45 billion. The company also reported an increase in its cash and short-term investments to an estimated $5.3 billion, up from $4.8 billion at the end of the first quarter