Key Points
Rivian Automotive (NASDAQ: RIVN) saw its shares slide this week after the electric vehicle (EV) producer raised $1.2 billion in gross proceeds through an equity offering. The stock is now down more than 16% year to date as of this writing.
The company sold 75 million shares for $15.50 apiece, while also giving underwriters the option to buy another 11.25 million shares at the offering price. Rivian intends to use some of the proceeds to fund its equity contribution under its loan with the Department of Energy (DOE) to build its new factory in Georgia. The new plant will help it increase its electric vehicle production capacity by about 50% to 300,000 vehicles a year.
In conjunction with its equity offering, Rivian also announced that it delivered 12,194 vehicles in the second quarter, well above its 9,000 to 11,000 forecast. It also raised its full-year delivery guidance to a range of 65,000 to 70,000 vehicles, up from a prior outlook of 62,000 to 67,000 SUVs. It started delivering its new R2 SUV on June 9, which was late in the quarter.
Is the stock a buy on the dip?
While the equity offering entails about 6% dilution, assuming the underwriters’ option is exercised, it is an important step toward helping the company fund its new factory in Georgia. Meanwhile, it is at one of the most pivotal times in its history with the recent launch of its R2 SUV.
The R2 has gotten some early rave reviews from automotive publications, and with a considerably lower price tag than its luxury R1 SUV, it brings its vehicles to a much wider audience. Increased unit volumes, which spread fixed costs across its vehicles, combined with better sourcing and other features, should eventually help pave the way to stronger gross margins and profitability.
On top of that, Rivian is looking to leverage its software expertise to enable autonomous driving, which would add another high-margin revenue stream. Its point-to-point, fully supervised self-driving (FSD) technology is expected to arrive by the end of this year and will be akin to Tesla‘s FSD. Earlier this year, it signed a deal with Uber to deploy 50,000 robotaxis to the ride-share company through 2031.
Rivian remains a speculative investment, but the company has a lot of exciting things going for it, including its new R2 model and its autonomous-driving capabilities. It’s also backed by major players like Amazon, Volkswagen, and Uber. As such, taking a small stake on this pullback could be worthwhile.
Should you buy stock in Rivian Automotive right now?
Before you buy stock in Rivian Automotive, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Rivian Automotive wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $407,651!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,252,823!*
Now, it’s worth noting Stock Advisor’s total average return is 922% — a market-crushing outperformance compared to 208% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
Geoffrey Seiler has positions in Amazon. The Motley Fool has positions in and recommends Amazon, Tesla, and Uber Technologies. The Motley Fool has a disclosure policy.
