Rivian's stock dropped more than 10% following the company's announcement that it will sell 75 million shares in an underwritten public offering. The move is intended to raise approximately $1.5 billion to fund production of its upcoming R2 SUV.
The capital raise comes as a blow to investor sentiment, even as Rivian preannounced a stronger-than-expected Q2 revenue outlook. The offering dilutes existing shareholders, triggering a sell-off that wiped out gains from the optimistic forecast.
Under the terms of the deal, underwriters have a 30-day option to purchase up to an additional 11.25 million shares. Rivian plans to use the net proceeds for working capital, capital expenditures, and other general corporate purposes, with a focus on scaling R2 production.
Market reaction was swift, with shares falling roughly 10% in after-hours trading. Analysts noted that while the revenue forecast was encouraging, the need for fresh capital raises questions about Rivian's path to profitability.
Barron's described the offering as necessary for growth but acknowledged it is tanking the stock in the near term. Investor's Business Daily reported the share drop as a direct consequence of the public offering news.