Key Points
Shares of the premium electric vehicle company Rivian (NASDAQ:RIVN) crashed 18% on July 7, after the company announced a common stock offering.
Rivian has launched an offering of 75 million common shares. Underwriters will have the option to purchase an additional 11.25 million shares of Rivian’s common stock over the next 30 days.
Based on Rivian’s closing price of $20.14 per share on July 6, the offering would raise slightly over $1.5 billion. Here’s why the stock is tanking.
Share dilution and other concerns
Raising additional common stock is typically dilutive to shareholders. The more shareholders, the more people who have a claim to Rivian’s earnings.
In a press release announcing the offering, Rivian said it expects to use the net proceeds for general corporate purposes, including funding necessary equity contributions for a loan arrangement with the U.S. Department of Energy (DOE).
In April, Rivian announced that it had restructured a loan with the DOE, reducing it from $6.57 billion to $4.5 billion.
CNBC reported that the initial loan had been negotiated under former President Joe Biden and would be used for two phases of production, totaling 400,000 vehicles.
Under the newly negotiated agreement, there will be one phase of production for up to 300,000 vehicles.
The Trump administration pulled back many incentives for electric vehicles, and the fate of the loan had been unknown until it was renegotiated in April.
In addition to its announcement of the common stock raise, Rivian released preliminary earnings results for the second quarter of 2026.
Rivian expects revenue in the second quarter to be between $1.55 billion and $1.65 billion, ahead of consensus estimates of $1.45 billion.
The company also expected to have cash and equivalents of $5.3 billion, up from $4.8 billion in the first quarter.
In a research note issued on July 7, HSBC analyst Neil Churchill stated that Rivian “is loss making and cash burning,” according to MarketWatch.
Churchill also noted that Rivian has received equity investments from Uber and Volkswagen.
“The question is whether these equity investments are enough considering the consensus forecasted cash burn and whether [Volkswagen] would participate in the capital raise to maintain its stake/influence,” he wrote.
At the end of the first quarter, Rivian had nearly $6.4 billion of long-term debt, non-current lease liabilities, and other long-term liabilities.
How to think about the stock
The environment for EVs has not been good since Trump’s One Big Beautiful Bill eliminated the $7,500 EV tax credit.
Following the Iran war, the outlook seems to have improved because the EV proposition became more compelling amid higher gas prices. Renewables could also become more attractive because they could help make the U.S. less reliant on foreign oil.
But it’s been tough sledding for most EV companies. Rivian lost $3.6 billion in 2025.
The company is planning to release an entry-level SUV that could start at $45,000 per vehicle, a core part of its strategy to eventually achieve profitability.
However, earlier this year, the company had to suspend guidance suggesting it could achieve positive net income in 2027.
While I think renewable energy companies could be a good long-term investment, I still think Rivian faces significant execution risk, especially given its financial situation.
I wouldn’t recommend anything more than a smaller, more speculative position at this time.
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 $409,970!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,200,223!*
Now, it’s worth noting Stock Advisor’s total average return is 916% — a market-crushing outperformance compared to 210% 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.
HSBC Holdings is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool recommends HSBC Holdings. The Motley Fool has a disclosure policy.
