Rivian share sale tests options traders after stock decline

Rivian shares fell $3.65 after the electric-vehicle maker announced plans to sell about 75 million shares, a capital raise that CNBC contributor Michael Khouw said would dilute existing holders by roughly 6% of the float. Khouw said the offering could add more than $1 billion of cash to Rivian’s balance sheet, extending its funding capacity as it prepares for its mid-market R2 vehicle.

The decline came after a rally in the stock. Khouw wrote that Rivian remained up nearly 15% over the prior eight trading sessions despite the sell-off tied to the equity offering. CNBC quote data showed Rivian at $16.44, down 5 cents, or 0.30%, at 12:55 p.m. EDT.

Rivian had $4.8 billion of cash at the end of the first quarter of 2026, according to figures cited by Khouw. He said the company faces about $9 billion of negative cash flow through fiscal year-end 2029, a funding gap that made additional capital likely as the company invests in manufacturing capacity.

A secondary share sale raises cash by issuing new equity. Existing investors own a smaller percentage of the company after the deal, but the company receives funds without adding debt service obligations. Khouw said he had previously argued Rivian should use equity rather than issue more debt, because equity would give the company greater financial flexibility.

The market reaction reflected investor concern over dilution and future funding needs. Khouw said the stock’s drop appeared large relative to the roughly 6% ownership dilution he calculated, particularly because the sale would improve near-term liquidity. He wrote that the company should have enough cash after the offering to reach early 2027, when investors may have more evidence of demand for the R2.

Options market reflects higher uncertainty

Rivian’s decline also pushed the shares back toward their 150-day moving average, a technical level followed by Carter Braxton Worth of Worth Charting, according to Khouw. Khouw said that level was close to the strike price of a put position he had discussed earlier: the August $16 puts.

Those August $16 puts closed at $1.45 per contract, equal to about 9% of the strike price, Khouw said. He disclosed that he had sold the August $16 puts at 85 cents, giving the trade a breakeven price of $15.15 at expiration.

Put selling is an options strategy in which a trader receives a premium while accepting the obligation to buy the underlying shares at the strike price if assigned. The strategy can resemble a limit order below the market, with compensation upfront, although it carries downside risk if the stock falls materially.

Khouw said implied volatility, a measure derived from options prices and often used as a gauge of expected uncertainty, rose to the 97th percentile over the past year after the offering announcement.

Khouw also pointed to Worth’s WRTH option income fund, which publishes its holdings nightly because it is fully transparent. He said the fund held about 100 options positions overall, including a short position in 1,000 Rivian July 17 expiration $17 strike puts. Khouw said he contacted Worth for comment on Rivian’s chart but did not hear back before publication.

This story draws on original reporting from CNBC.