Rivian to raise $1.3B from sale of bonds. Premature?

[clcbjc123]

Looks like Walgreens is doing better than Rivian the last two days...

CNBC highlights

Rivian Automotive plans to raise $1.3 billion in cash via a sale of convertible notes.

The EV maker had $12.1 billion on hand as of the end of 2022.

Earnings reports from Rivian and fellow EV maker Lucid revealed concerns around demand for electric vehicles.

Rivian isn’t in an urgent cash crunch, at least not yet. The EV maker had $12.1 billion on hand as of the end of 2022, it said during its fourth-quarter earnings presentation Feb. 28, enough to fund its operations through 2025. But it recently made a series of moves to conserve cash, laying off 6% of its workforce and pushing the R2 launch out a year. Not partnering with MB.

Rivian also said last week that it expects to produce 50,000 vehicles in 2023, fewer than the roughly 60,000 that Wall Street analysts had expected. That may be a sign that demand for its high-priced pickups and SUVs is falling short of its expectations.

Rivian said the convertible notes will qualify as “green bonds,” meaning they meet a set of criteria that tends to attract institutions willing to accept lower returns in exchange for supporting sustainable development.

The notes will mature in March 2029. The interest rate and other terms will be decided when the offering is priced.

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[Tahoe Man]

Rivian still has a bumpy few years ahead. They have enough cash through 2025 according to the last investor's call.

I've had a near perfect experience with Rivian. Just like the Model 3 for Tesla, the more affordable R2 vehicles will likely decide the fate of the company.

It's the economy and how much money gets slushed around within it that will decide the fate.

Trying to upstart a new EV automaker without competition is almost impossible in a great economy. Rivian is trying to do this in a souring economy, rising cost of money with a lot of oncoming competition.

How fast do we get back to 2% inflation is key.

 

[rushidesai]

Would the notes be priced at current stock price (~$17)? I wonder why they couldn't wait for stock to recover a bit before the announcement.

 

[Trandall]

Looks like this is getting to be a final lifeline for them. I'm not sure how they survive longer term. They'll have to rely on the economy being just right, that is rates stop rising and start to fall. But more then likely either rates stay high because inflation or rates drop because the economy is slowing quickly and unemployment rises. On top of all of this, is more competition from automakers that are in better positions financially.

They have their work cut out and this isn't Tesla who had economic and financial winds at their back and still had major issues.

Final lifeline!?!, long term survival!!!
This analysis makes no sense. They have enough capital to carry them into 2025, prior to that I fully expect them to raise more capitol in the same way that their initial IPO was a "lifeline" until they reach profitability sometime this Decade. They are executing the plan laid out in the S1 filing as precisely as ANY company, startup or otherwise, could be expected given the conditions. They are currently in a better position than Tesla was in during 2018.
Is Rivian impacted by market forces? of course same as other auto manufactures, I could make the case that Rivian would hold up to harsh stagflation better than legacy OEM's because their total exposure is much less in relation to their capitalization. All this dire doom and gloom rhetoric is utter nonsense.... "final lifeline"... oh please.

 

[zipzag]

Would the notes be priced at current stock price (~$17)? I wonder why they couldn't wait for stock to recover a bit before the announcement.

The timing of the bond would be what the investor wanted. The exercise price on the options negotiated, of course.

This bond is why RIVN dropped.

Basically the investor is looking at RIVN price after a few years of R2 production.

One very good argument for Rivian keeping a substantial cash buffer is to keep potential buyers from fleeing.

 

[zipzag]

Final lifeline!?!, long term survival!!!
This analysis makes no sense. They have enough capital to carry them into 2025, prior to that I fully expect them to raise more capitol in the same way that their initial IPO was a "lifeline" until they reach profitability sometime this Decade. They are executing the plan laid out in the S1 filing as precisely as ANY company, startup or otherwise, could be expected given the conditions. They are currently in a better position than Tesla was in during 2018.
Is Rivian impacted by market forces? of course same as other auto manufactures, I could make the case that Rivian would hold up to harsh stagflation better than legacy OEM's because their total exposure is much less in relation to their capitalization. All this dire doom and gloom rhetoric is utter nonsense.... "final lifeline"... oh please.

That's a good point. The rollout of the Model X and the Model 3 was a shitshow. The rollout of the model Y was excellent.

As far as a new company making new vehicles Rivian has done great on the actual vehicles.

 

[Dark-Fx]

Final lifeline!?!, long term survival!!!
This analysis makes no sense. They have enough capital to carry them into 2025, prior to that I fully expect them to raise more capitol in the same way that their initial IPO was a "lifeline" until they reach profitability sometime this Decade. They are executing the plan laid out in the S1 filing as precisely as ANY company, startup or otherwise, could be expected given the conditions. They are currently in a better position than Tesla was in during 2018.
Is Rivian impacted by market forces? of course same as other auto manufactures, I could make the case that Rivian would hold up to harsh stagflation better than legacy OEM's because their total exposure is much less in relation to their capitalization. All this dire doom and gloom rhetoric is utter nonsense.... "final lifeline"... oh please.

Best not to argue with the Teslastans.

 

[Arky]

I feel like Tesla's price drop is more of an impact than this financing announcement. Model X is now at 99k for 350 miles, which is about the price of the R1S. You can argue it's not as capable but Tesla isn't going anywhere, the car is well established, and you would have access to a far superior charging network with an MX or MS. Plus you can get a round wheel on them now.

Rivian is missing a few features in the 100k bracket that competitors have, this was more forgiveable at 80k. I can forgive the lack of massaging seats but we barely have functional climate control, and no active noise cancelling at all.

 

[CascadianApe]

Let me get this right. During the earnings call, just 7 days ago, question was asked about the liquidity status and need to raise more cash. To which Clare and RJ said that they had sufficient funds to get them through 2024 into 2025.

So what changed in the last week that they are now disclosing the corporate debt offering?

I already see class action law suit being worked by ambulance chasing attorneys...

Raises question about their whole conference call. This and the production rate difference between the official and "internal goal", which now effectively is the exception by all the analysts.

Like I'd said in another thread, that was the worst call I'd heard in a very long time so I shouldn't be surprised at this action now....

Always take whatever RJ says with a grain of salt. The guy has zero forward thinking and is more engineer than company leader. The company needs a new CEO.....

 

[CascadianApe]

They're burning cash faster than everyone thinks...

 

[Dark-Fx]

Always take whatever RJ says with a grain of salt. The guy has zero forward thinking and is more engineer than company leader. The company needs a new CEO.....

What things has RJ done or not done that make you think this?

 

[Njord6]

For the moment, this is a proposed offering of $1.3B in green convertible senior notes for purchase by institutional investors only. Without weighing in on the proximity of the press release to the quarterly call, this does tie in with their commitment to sustainability. The newly released (March 2023) Green Financing Framework, attached here, does a decent job describing the intent of issuing green bonds. One important point from the framework states that proceeds from green bond sales are used for qualifying green projects within 24 months of the issue date.

Issuing this type of debt has additional tax benefits to Rivian, which should be advantageous compared to other financing sources. The pre-existing cash on their balance sheet is preserved for anything that does not qualify for a green funding source and avoids new equity or general bond issuance.

Why issue debt now? Beyond the green bond advantages to financial performance, the interest rate picture does not look likely to improve until sometime in 2024 or later. Federal Reserve Chairman Jerome Powell's testimony today pushed the expected interest rate path higher and longer based on the futures contracts, CME FedWatch Tool - CME Group (look at the probabilities). The expectation is for equivalent, or more expensive debt financing until July 31, 2024. Common equity valuation is bumping along the bottom of public share price and only about $0.60/share lower than the post-earnings lows last week. Not a significant impact at this point and arguably far less harmful to share price than in the future. Consolidate the "bad news" now and get it in the rearview mirror for the company.

I own Rivian shares that are in the red like nearly every other equity owner. I like the company, I can't wait to get my R1S whenever NC gets its act together for me to take delivery, and I hope this financing plan turns out positively.

 

[kizamybute']

As much as I love my truck and have been rooting for this company, they're really starting to piss me off with the decisions they make. They have at least 100,000 back orders. That's $8 billion. BUILD VEHICLES! So many decisions they make have just destroyed their stock and all the investors that had faith in them. They do these surprise announcements that just kill the investors. They need a co-leader at that company that can teach them how to do things in a better manner so the decisions hit a lot softer.

They say 50,000 vehicles to be built, stock tanks. Then they change it to 62,000, rebounds a little. Then announce another recall. Then say they have plenty of cash, only to reverse course AGAIN. It's three steps back for every step forward they take. Just horrible how they're handling being a public company.

 

[DuoRivians]

Rivian needs a better investor relations team and a better way to handle news, and manage the markets. This is pretty bad amateur hour

 

[NY_Rob]

Guess they'll be removing the 12 V outlet in the Frunk again... you know, cause it saved them sooooo much last time.

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