Down 18%, Should You Buy Rivian Stock After Its Biggest 1-Day Drop Since November 2024?
A new stock offering is the latest symptom of an ongoing problem.
Overview
July 7 was a rough day for Rivian Automotive (NASDAQ: RIVN) shareholders. The upstart electric vehicle (EV) company saw its stock plunge 18.1%, its largest single-day decline in almost two years. Rivian had announced only days earlier that it topped its second-quarter guidance with 12,194 deliveries, and raised its full-year delivery outlook from 62,000 to 67,000 vehicles to 65,000 to 70,000 vehicles.
The culprit? A new common-stock offering that underlines the reality that Rivian is still losing a ton of money and needs substantial additional capital to continue growing. It can be tempting to buy Rivian stock on this dramatic decline. Here's why that's probably not a good idea in this case.
Details
Rivian sold 75 million new shares at $15.50 per share, raising approximately $1.2 billion in gross proceeds. The company also granted the underwriters an option to purchase an additional 11.25 million shares of common stock. The funds are for general corporate purposes and equity contributions for a loan arrangement with the U.S. Department of Energy.
Source
Originally published at www.fool.com.