By Chibuike Oguh and Abhirup Roy
NEW YORK (Reuters) -Shares of Rivian Automotive Inc fell by nearly 23% on Thursday, the biggest daily percentage decline since their debut in 2021, after the electric vehicle maker unveiled plans to issue $1.5 billion worth of convertible green bonds.
Irvine, California-based Rivian expects the bonds, which mature in October 2030 and can be converted to either cash or its shares, will help it to “de-risk” the launch of its R2 sports utility vehicle in Georgia, a company spokesperson told Reuters on Wednesday.
It is the second time in less than a year that Rivian is issuing such a green bond, which raises capital from investors seeking to back climate-focused projects. The company had issued a $1.3 billion convertible green bond in March to support the launch of its smaller R2 vehicle family.
Rivian’s shares fell by 22.9% to close at $18.27, a three-month low. The stock, which is down about 1% year-to-date, has now dropped 77% from its initial public offering price of $78 in November 2021.
“The raise came earlier than expected,” said Elliot Johnson, chief investment officer at Evolve ETFs, which manages over $5.2 billion in assets, including investments in EV startups such as Rivian.
“So, shipping the same number of cars, earnings are in line, they’re raising cash earlier than people thought and the cash flow could be dilutive – I think that’s a concern because it’s still seen as a speculative business,” Johnson added.
Rivian, which is backed by e-commerce giant Amazon (NASDAQ:), has been burning through cash to ramp up production and keep up with market leader Tesla (NASDAQ:) Inc, which has slashed prices. The company beat estimates in the third quarter by producing 16,304 vehicles and delivering 15,564 vehicles to customers.
It said on Monday it was