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On Wednesday, electric vehicle (EV) startup Rivian (RIVN) said it plans to sell $1.5 billion worth of convertible green bonds. The announcement sent the company’s shares tumbling 9% in the premarket, nearly wiping their gains from the day before. 
 

Bonds Sale Announcement

Shares of Rivian Automotive fell around 9% in the premarket trading Thursday after the EV startup announced a $1.5 billion convertible green bond sale and issued a quarterly revenue forecast that was in line with analysts’ expectations.

The premarket dip nearly erased the 9.2% gains Rivian saw during the Wednesday trading session, fueled by a strong vehicle delivery report for the quarter ending September 30. The company also reaffirmed its full-year production target of 52,000 cars, adding to the investor optimism on the day. 

However, the gains were offset by the bond sale announcement. This is primarily because convertible bonds can be dilutive when converted into shares, often leading to adverse investor reactions when issued. 

Rivian bonds are set to mature in October 2030, when investors will earn the option to convert them into cash or company shares, the automaker said in the filing. Meanwhile, initial investors can purchase an additional $225 million of the bonds for settlement 13 days after their issuance date. 
 

Rivian is on Track to Meet 2023 Production Target

Despite a negative impact from the bond sale announcement, it’s been a stellar several months for Rivian.

The stock market surge was mainly fueled by the company’s back-to-back solid quarterly reports. In Q2 2023, the startup delivered 12,640 vehicles, beating Wall Street estimates and aligning with industry giant Tesla. 

The momentum continued into the third quarter, when Rivian said it delivered 15,564 vehicles, up 23% from the previous three-month period and above the consensus estimates of 14,000. Additionally, the company reiterated it remains on track to meet its 2023 production target of 52,000 vehicles. 

Overall, 2023 has also been positive for the broader EV sector. Tesla’s shares skyrocketed more than 140 year-to-date, reinforcing its position as the world’s most valuable electric carmaker. 

However, Elon Musk’s firm has been facing intensifying competition lately, particularly from the China-based manufacturer BYD. In Q3, the Chinese auto manufacturer – growing faster than Tesla for some time now – produced more EVs than its US rival for the first time. Meanwhile, Tesla missed expectations for Q3 deliveries.

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