British electric vehicle (EV) company Arrival (NASDAQ:ARVL) is the odd one out this morning. ARVL stock is down 15% today, in a week when many EV companies are pushing all-time highs. After approaching a new peak earlier this month, Arrival is in the midst of a second major drop in share price in just the past two weeks.
What’s going on with the auto maker this morning?
The markets are likely responding to news that Arrival will commence a secondary public offering of 25 million ordinary shares. The roughly $200 million worth of funding will be allocated to internal projects, according to a press release this morning.
Secondary offerings are frequently considered buy signals for many investors. But of course, where there’s a will for a correction, there’s a way.
Will ARVL Stock Get Its Fair Share of the EV Boom?
Anyone within a 10 mile radius of a trending tickers list knows EV stocks are red-hot this week. With wonder-child Rivian (NASDAQ:RIVN) posting record-breaking numbers for its initial public offering (IPO) last week, most of the EV market has seen a harmonious jump in share price. Furthermore, Lucid (NASDAQ:LCID) was at it’s all-time high going into market open.
Arrival’s recent movement has been less straightforward. After an underwhelming quarterly report last week that dragged ARVL down more than 15%, it’s only being bludgeoned by another correction.
While secondary offerings can be construed as a reinvestment opportunity, for Arrival, many see it as a get-funding-quick scheme that serves to dilute current investors’ holdings.
The offering will be in the form of “green convertible senior notes” with 2026 maturity dates. The notes will convert to cash and/or common stock. Interest rates, conversion rates and other particulars related to the offering will depend on the price of the notes.
On the date of publication, Shrey Dua did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.