Why Rivian Stock Plunged Today

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Shares of** Rivian Automotive **(RIVN 18.12%) reversed course on Tuesday after the electric vehicle (EV) manufacturer announced a sizable capital raise.

Image source: Getty Images.

Deliveries are rising, but so are production costs

On Thursday, Rivian announced that it delivered 12,194 vehicles in the second quarter, handily exceeding its guidance of 9,000 to 11,000 deliveries. Strong sales of the company's pickup trucks and delivery vans contributed to the outperformance.

The results prompted the automaker to boost its full-year deliveries goal to 65,000 to 70,000, up from a prior forecast of 62,000 to 67,000.

Unsurprisingly, the news drove investors to bid up the EV maker's shares.

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NASDAQ: RIVN

Rivian Automotive

Today's Change

(-18.12%) $-3.65

Current Price

$16.49

Key Data Points

Market Cap

$25BMarket cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.Market cap calculated using publicly traded shares outstanding only. Does not include unlisted, private, or dual-class non-traded shares. Implied market cap may vary.

Day's Range

$16.38 - $18.09

52wk Range

$11.57 - $22.69

Volume

91.2M

Avg Vol

30.8M

Gross Margin

-441.39%

Yesterday, however, Rivian said it would sell 75 million shares of its stock to raise cash. The company also granted underwriters a 30-day option to purchase an additional 11.25 million shares.

Based on current prices, the share offering could raise more than $1.4 billion. Rivian plans to use the proceeds to fund its growth initiatives and equity contributions related to a loan from the U.S. Department of Energy.

Disdain for dilution drove investors to sell

Rivian's share sale reminded investors that it's still a long way from achieving sustained profitability. And even when the EV upstart performs well, as it did when it raised its full-year vehicle delivery target on July 2, the good news is often followed by stock offerings that can halt and even reverse its share price gains.

That can be frustrating for all but the most patient investors. Many shareholders, in turn, decided to sell today.

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