Rivian Automotive (RIVN) -) delivered 15,564 vehicles in the three months ending in September, beating Wall Street expectations and more than doubling the 6,500 cars the electric vehicle startup delivered last year.
Despite the rosy production and delivery numbers, Rivian shares tumbled sharply Oct. 5 on news of the company's plan to issue $1.5 billion in convertible bonds. The sale, conducted to support Rivian's R2 vehicle and $5 billion Georgia plant, pushed the stock down nearly 20% Oct. 5.
Rivian shares fell a further 3% Monday morning.
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The move, according to Wedbush analyst Dan Ives, was a big misstep for the EV startup.
“While we fully get the capital needs down the road for Rivian as it ramps production/deliveries over the coming years, the Street’s low confidence in this management team around investor messaging and execution is a major problem for the stock and remains a huge overhang,” Ives wrote in a note to clients on Monday.
Wedbush, reiterating an outperform rating on Rivian's stock, cut its 12-month price target on the company to $25 from $32.
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“Patience is wearing thin across the Street as Rivian heads into its next stage of growth and production expansion as surprises out of left field is a building headache for investors,” Ives wrote, adding that the company “continues to stumble with head-scratching strategic/investment moves again and again with this latest convert move along those lines.”
Though Wedbush remains positive on the Tesla (TSLA) -) competitor, Ives warned that another similar mistake could send the bulls running.
“While we maintain our outperform rating and remain positive on the name, one more big misstep like this convert offering would be the final straw that broke the camel’s back for many bulls including ourselves,” he said.
Shares of Rivian are up 1.79% for the year.
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