Rivian Automotive shares plunged more than 10% on Tuesday after the electric vehicle maker announced plans to sell 75 million new shares of common stock in a public offering, a move designed to raise approximately $1.5 billion but one that also increases shareholder dilution.
The sell-off came despite the company recently posting stronger-than-expected preliminary second-quarter revenue guidance and improving investor sentiment surrounding its upcoming R2 electric SUV.
The company said the proceeds from the offering will be used primarily to fund equity contributions required under its loan agreement with the U.S. Department of Energy, as Rivian continues construction of its manufacturing facility in Georgia. At Monday's closing price of $20.14 per share, the planned sale would generate roughly $1.5 billion before underwriting fees and expenses.
Underwriters also have the option to purchase an additional 11.25 million shares within 30 days, potentially increasing the total amount raised. Investors reacted negatively to the capital raise, sending Rivian shares sharply lower in premarket trading before extending losses after the opening bell. Equity offerings often pressure stock prices because issuing new shares dilutes the ownership stake of existing shareholders.
The decline erased much of the optimism that had lifted Rivian stock in recent days. Shares had rallied more than 17% after the company reported stronger vehicle deliveries and raised its full-year outlook, fueling hopes that demand for its vehicles was stabilizing as it prepares to launch more affordable models.
Rivian said the timing of the offering reflects favorable market conditions after the recent rally. A company spokesperson told Reuters that the stronger share price made it "the right time for Rivian to secure additional funding," while supporting long-term expansion plans.
The capital raise comes as Rivian accelerates development of its next-generation R2 platform, a midsize SUV expected to begin production at its new Georgia facility. The project is central to the automaker's strategy of expanding beyond its premium R1T pickup and R1S SUV into a broader segment of the EV market.
Construction of the Georgia plant is backed in part by a $4.5 billion loan from the Department of Energy, making the required equity contribution an important milestone for accessing the government financing package. The facility is expected to significantly expand Rivian's production capacity over the coming years.
The share offering overshadowed what otherwise appeared to be encouraging financial updates. Rivian projected second-quarter revenue between $1.55 billion and $1.65 billion, comfortably above Wall Street's consensus estimate of approximately $1.45 billion. The company also reported ending June with about $5.3 billion in cash and cash equivalents, giving it substantial liquidity even before the new offering.
Rivian is scheduled to report full second-quarter financial results later this month, and the company remains unprofitable as it invests heavily in new vehicle development, manufacturing expansion and software capabilities. Analysts have long expected the company would need additional capital before reaching sustainable positive cash flow.
