Rivian (NASDAQ:RIVN) tumbled in price Tuesday after announcing Monday it plans to sell $1.3 billion worth of bonds. The capital will help facilitate the launch of Rivian’s R2 vehicles.
Rivian, a major electric vehicle company, that was once valued more than Ford, has been under pressure. In 2022, the company burned through billions of dollars as it ramped up production. The firm’s revenue of $663 million came in at lower than expected. It lost $1.73 per share as it produced 10,020 vehicles in the fourth quarter, as we wrote here .
Rivian saw its cash burn increase at a worrying rate. It ended 2021 with more than $18 billion in cash on hand. By the end of 2022, this cash hoard had plummeted to about $11.56 billion. If the cash burn increases, analysts believe that Rivian’s current cash will run out by 2025.
Rivian stock price plunged after the company announced that it will seek to raise $1.3 billion in cash in a private offering. The new fundraising is structured as a green convertible senior note offering. This note will accrue interest payable every six months with the maturity date being March 2029.
Investors are concerned about the situation considering that the company is sitting at over $11 billion in cash. And with interest rates rising, the company is seeing a significant return on its cash on hand. In 2022, Rivian’s interest and investment income jumped to over $103 million, higher than the previous $11 million.
RIVN shares slid $1.64, or 9.5%, to $15.49.
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