Stocks in the electric vehicle (EV) sector are on the move today. That includes shares of Rivian Automotive (NASDAQ: RIVN). Its stock pushed more than 6% higher, and remained up by 3.5% as of 12:10 p.m. ET.
But that move was notably weaker than many other stocks in the sector. This is because of news of another capital raise for Rivian.
$15 billion in borrowing
Today’s move higher was more associated with more general economic news that is pushing most growth stocks higher. But it’s the news from Rivian of a new borrowing plan that is tempering the gains in Rivian stock.
In a filing with the Securities and Exchange Commission (SEC), Rivian said it will borrow up to $15 billion in debt related to its planned new factory in Georgia. New bonds will be issued through a multicounty agency from the region, where construction is set to begin early next year. Rivian will purchase the bonds as they are issued for the project from the county agency. The plans also include a rental agreement for land, buildings, and equipment for the project.
Rivian has committed to investing $5 billion for the plant that it says will employee about 7,500 workers to produce 400,000 EVs annually. The new financing arrangement may have come as somewhat of a surprise to investors. After all, Rivian ended the third quarter with over $9 billion in cash and equivalents on its balance sheet.
A speculative investment
That helps to highlight just how speculative an investment in the EV maker is. Rivian needs that money to grow scale enough to even approach profitability. The company reported an operating loss of more than $1.4 billion in the third quarter.
It will need the Georgia facility to be the successful flagship plant for the business. Rivian’s next-generation vehicle platform technology will be built there. Today’s stock move shows investors are hesitant due to all the potential challenges, even on a day when the macro picture is pushing stocks higher.
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Howard Smith has positions in Rivian Automotive. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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