Rivian (RIVN) raised additional capital, giving the electric-vehicle upstart more runway as investors have been frustrated with a slowdown in its production.
Investors have lost patience, punishing the stock by nearly two-thirds (62%) in the past six months and 10% in the past month.
DON'T MISS: Rivian Stuns Investors With Very Bad News
Rivian doubled, to $1.5 billion, its revolving-credit facility, which is currently undrawn. And it doubled its letter-of-credit capacity to $1 billion.
“The amendments to our asset-based revolving credit facility reinforce Rivian's strong balance sheet position and reflect an important step in our portfolio-based capital road map," Chief Financial Officer Claire McDonough said in an April 19 statement.
For several months, the the Irvine, Calif., company's struggle to ramp up output due to supply-chain disruptions raised concern that it needed to raise capital.
Rivian on Feb. 28 had said its cash position fell. The company had cash and equivalents of $12.1 billion at the end of December, down from $13.8 billion at the end of the third quarter and $15.5 billion at June 30.
Net cash used to fund its operations for fourth-quarter 2022 was $1.45 billion, up from $1.1 billion in the year-earlier period. For full-year 2022, the company burned $5.05 billion, nearly double the $2.62 billion it used during the previous year.
Rivian needs the additional capital since the automaker is building a second plant in Georgia, east of Atlanta, and in 2026 plans to start production of a smaller and more affordable vehicle, the R2 series.
The federal tax rebates of $7,500 given for the purchase of EVs do not apply to Rivian since their vehicles cost more. Consumers have turned to cheaper, more affordable models offered by Ford (F) and Tesla (TSLA) that qualify for the tax rebate.
Rivian: A New Plant and a Lower-Priced Vehicle
The automaker also recently announced a bond issue aimed at raising $1.3 billion. The funds were targeted to finance its operations, particularly the development of its low-cost vehicle that are expected to be sold in 2026.
"Rivian intends to use the net proceeds from the offering to finance, refinance, make direct investments, in whole or in part, in one or more new or recently completed (within the 24 months prior to the issue date of the notes), current and/or future eligible green projects," the carmaker said.
These projects include investments in financings of clean transportation, renewable energy, energy efficiency and pollution prevention and control.
Rivian's Demand Problems -- and Q1 Progress
Chief Executive RJ Scaringe did not reassure investors when he said the company, which manufactures the R1S SUV, the R1T pickup truck and the EDV van at its Normal, Ill., plant, likely has a demand problem.
"Certainly, what we're witnessing in the macro and what we're seeing in terms of interest rate is ... across the industry, having an effective moderating overall demand," Scaringe told analysts during the fourth-quarter earnings call.
Rivian ended its tradition of updating its preorder book at the end of each quarter. At the end of November, the group had 114,000 orders. The company said it had a "net preorder backlog that extends into 2024."
But in April, during a presentation at the Bank of America Securities Summit, CFO McDonough forecast the company will make a profit in 2024 after deducting the costs associated with making and selling its cars.
This is what Rivian told investors in February: "We forecast reaching positive gross profit in 2024 and therefore expect that by the end of 2024."
The carmaker is forecasting a loss excluding interest and amortization of $4.3 billion this year. For 2022 Rivian recorded a net loss of $6.75 billion, compared with $4.7 billion in 2021.
On April 3, Rivian said that in the first quarter it produced 9,395 vehicles at the Normal plant and delivered 7,946 vehicles in the period.
"These figures remain in line with the company’s expectations, and it believes it is on track to deliver on the 50,000 annual production guidance previously provided," Rivian said.
Rivian is set to report Q1 results on May 9 after the market closes.
