Shares of electric vehicle maker Rivian Automotive dropped 15% to $17.60 in intraday trading after the company announced a plan to sell 75 million common shares. The capital raise aims to help Rivian repay a loan from the US Department of Energy (DOE), the company disclosed on Tuesday. This decline reversed recent gains following a strong rally in the previous sessions.
Rivian's share price had climbed nearly 38% over the previous six trading days, closing higher in five of those sessions. The company revealed the share offering alongside its second-quarter revenue report, which showed $1.3 billion in revenue. The share sale is intended to reduce debt by repaying the DOE loan, a strategic move to improve the company’s financial position, according to livemint.com.
The announcement highlights the challenges faced by EV makers in managing capital and debt amid competitive pressures. Rivian's move to raise capital through a large share offering contrasts with other EV companies that have sought alternative financing routes. The share price drop reflects investor concerns about dilution and the impact on shareholder value, a common reaction in the sector when large equity raises are announced.
Rivian’s next financial update and the completion status of the share offering will be closely watched by investors. The company reported $1.3 billion in revenue for the second quarter, a key figure that will factor into market assessments of its recovery and growth prospects in the competitive EV market.