Electric vehicle startup Rivian saw its stock price fall by 20% on Thursday after the company announced plans to raise $1.5 billion through a convertible debt offering and issued preliminary third-quarter revenue guidance that missed expectations.
Rivian said it expects to report revenue of $1.29 billion to $1.33 billion for the third quarter. While in line with analyst forecasts, the guidance suggests slower growth from the prior quarter’s revenue of $364 million.
The company also warned that revenue in the fourth quarter would fall below Wall Street estimates of $2.7 billion. Rivian blamed supply chain issues and production constraints for the disappointing guidance.
In addition, Rivian announced plans to issue $1.5 billion worth of convertible senior notes due in 2026. The move to raise capital through debt rather than equity signals some urgency from Rivian to shore up its balance sheet, analysts said.
Rivian has struggled this year amid the broader selloff in high-growth tech stocks. The company’s shares have plunged more than 70% from their peak last November following Rivian’s blockbuster IPO.
Production problems, rising costs, and stiffer-than-expected competition in the EV market from rivals like Tesla have all weighed on Rivian this year. While the company is well-funded, it faces an uphill battle to ramp up manufacturing and deliver vehicles during a global supply chain crunch.
Thursday’s stock drop shows investors are increasingly skeptical about Rivian’s growth trajectory. The convertible debt sale may buy Rivian more time, but execution remains key if the company hopes to justify its lofty valuation, analysts say.
