Rivian Automotive Inc. Announces Pricing of $1.5 Billion Convertible Debt Offering

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Shares of Rivian Automotive Inc. experienced a significant rebound in Friday’s premarket session following the company’s announcement of the pricing for its $1.5 billion convertible debt offering. However, the initial rise was short-lived as the stock took a downward turn, potentially extending the previous day’s record selloff.

Yesterday, Rivian’s stock (RIVN, -22.88%) saw a drastic decline of 22.9%, marking its largest one-day drop since its initial public offering in November 2021. Investors reacted negatively to the EV maker’s plans for convertible capital raise and its third-quarter sales outlook.

Despite the initial setback, Rivian’s stock initially surged by 2% after the pricing was revealed late on Thursday, coinciding with the start of the premarket session at 4 a.m. Eastern time. However, this upward momentum did not sustain, and the stock is currently down by 0.6%, likely leading to an opening at a nearly three-month low.

Rivian disclosed that the $1.5 billion “green” convertible senior notes due in 2030 would accumulate interest at a rate of 3.625%. This rate represents a whole percentage point decrease compared to the company’s previous offering in March, where the “green” convertible debt amounted to $1.3 billion and carried an interest rate of 4.625%.

During this period, the yield on the 10-year Treasury note (BX:TMUBMUSD10Y) rose by approximately 0.74 percentage points.

In regard to the latest offering, the initial conversion rate implies a conversion price of $23.29, which represents a premium of 27.5% over Thursday’s closing price of $18.27. In comparison, the March offering had an initial conversion price of $20.13, indicating a premium of 37.5%.

With this new convertible debt offering, Rivian seeks to strengthen its financial position and support its ambitious plans for growth and innovation in the rapidly evolving electric vehicle market.

## Rivian’s Latest Stock Offering Shows Promising Results

Rivian’s stock has experienced a significant rally of 24.8% since its last offering. The latest offering provides investors the flexibility to convert their investments into common stock, cash, or a combination of both. This option is available from and after July 15, 2030, following the timeline differently from the previous offering which allowed conversion post December 15, 2028. Interestingly, the initial conversion rate of the latest offering indicates a gain of 15.7% in the stock over the 19-month gap between the two conversion periods.

Truist analyst Jordan Levy expresses confidence in Rivian by reiterating their buy rating in a recent note. Levy’s note was published before the pricing of the latest offering. According to Levy, Rivian’s stock price target of $30 presents a potential upside of 64% to Thursday’s closing price.

Levy views the latest offering as in line with expectations and believes it demonstrates Rivian’s strategy of “opportunistic” capital raises. This assessment comes after the stock had already shown promising growth with a 9.2% increase on the day. While some anticipated a selloff in the stock following the offering, Levy remains optimistic and suggests that with most uncertainties addressed, there is an increasingly positive outlook for Rivian’s third-quarter results, expected to be released in early November.

Despite a 15.5% decline in Rivian’s stock over the past three months, it is worth noting that EV giant Tesla Inc.’s stock has also experienced a 6.0% decline during the same period. Furthermore, the S&P 500 index has slipped by 3.5%.

Rivian’s latest offering demonstrates its commitment to strategic capital raising and ongoing growth opportunities. With positive projections for the company’s third-quarter results and a promising rally in its stock, Rivian continues to be an exciting prospect in the market.

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