After investors reacted extremely nervously to Rivian’s announcement of a green convertible bond, CEO Robert “RJ” Scaringe is now trying to allay their worries.
• Rivian announced another convertible bond
• Investors react in horror
• Rivian CEO appeases and wants to regain trust
At the beginning of October it was announced that Rivian would like to raise fresh capital by issuing a green convertible bond with a volume of $1.5 billion. The Bonds are due in October 2030, then investors can choose whether to convert the bonds into Rivian shares or receive a cash payment.
“Our primary goal is to maintain a conservative balance sheet,” a company spokesman told Reuters. As he further explained, the purpose of the corporate action is to “reduce the risk of implementing the R2 in Georgia.” At the beginning of 2026, the electric car manufacturer, which is currently setting up its second production site in Georgia, wants to expand its range and, in addition to the already available electric pick-up R1T and the electric SUV R1S, also launch the first vehicles based on the R2 platform .
Sniffy Rivian shareholders
However, the electric car manufacturer, which is considered one of Tesla’s fiercest competitors in the USA, had already issued similar bonds worth $1.3 billion in March – and also justified this by saying that it was in favor of launching the smaller R2 -Vehicle family wants to secure financially. The company then declared that it now had enough money to make ends meet until 2025.
The fact that Rivian now wants to issue convertible bonds again was not well received by shareholders; in an initial reaction, they sent Rivian shares plummeting by over 22 percent by the close of trading on October 5th. This is due to the fact that this capital measure will later lead to a price dilution when converted into shares.
Critical analysts
Many analysts are also extremely critical of the capital measure. One of those is Wedbush Securities analyst Dan Ives, who lowered his Rivian 12-month price target from $30 to just $25 because confidence in Rivian’s growth story had taken a “significant hit,” he said . In his opinion, the bond issuance is another example of “continued execution/communication missteps” by Rivian. “While we fully understand Rivian’s capital needs in the coming years, the stock market’s low confidence in the management team in terms of investor communication and execution is a major concern for the stock,” a research note said -Note of Wedbush.
Rivian is currently burning billions of dollars to boost production numbers. But at least we can see success here: the company has been able to significantly increase production at its plant in Normal (Illinois) in recent quarters. According to Reuters, Rivian delivered 15,564 electric cars in the third quarter, exceeding analysts’ expectations of just 14,740 vehicles.
Rivian CEO wants to address concerns
The strong reaction from investors and analysts has now prompted Rivian CEO Robert “RJ” Scaringe to address concerns about the financial health of the company he founded in 2009. He told Reuters that the earlier-than-expected capital measure did not reflect operational concerns but was intended to strengthen the balance sheet before geopolitical risks increase borrowing costs. He referred to the recent robust economic data as well as uncertainties surrounding the Israel conflict, in view of which many market participants assume that the US Federal Reserve Bank will probably keep its key interest rate at a high level for a longer period of time.
Against this background, the new capital measure serves the purpose of creating an additional reserve, as significant investments are pending in the development of the R2 vehicle family. “I wouldn’t say this is a reflection of the level of confidence we have in both the execution and our cost structure for R2,” Reuters quoted the Rivian CEO as saying. Instead, the move is intended to ensure that “we are never in danger of having an overly constrained or too narrow balance sheet,” Scaringe said.
Editorial team finanzen.net
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