What happened
Shares of Israeli-based electric vehicle (EV) technology company Ree Automotive (REE -12.50%) sank Tuesday as the company filed for a major common-share sale. As of 3 p.m. EDT today, Ree shares were tumbling 35%.
So what
Ree Automotive began trading publicly in July 2021 after merging with a special purpose acquisition company (SPAC). Ree designs and manufactures mobility platforms for EVs and offers several different models for EV companies to build their models based on Ree's platforms.
Like many EV start-ups recently going public through SPACs, Ree's shares have been sliding since its public debut, down about 10% prior to today's session. Ree initially raised about $285 million on the deal, but investors are running scared today after the company said in a Securities and Exchange Commission filing that early shareholders plan to sell up to 30 million shares.
A Ree Automotive EV platform. Image source: Ree Automotive.
Now what
The 30 million shares represent the full amount that the initial private investment in public equity (PIPE) purchased in the SPAC deal. They also amount to about 10% of current shares outstanding.
Prior to going public, Ree announced a collaboration with global automotive supplier Magna International (MGA 1.02%) to pursue a mobility-as-a-service (MAAS) model for light commercial vehicles. The companies say the agreement would enable them "to develop MEVs [modular electric vehicles] that enable commercial customers to customize vehicles based on their specifications and branding, while accelerating time to market."
While the company won't gain any proceeds from the share offering, it doesn't instill confidence when early private investors are looking to cash out just over a month after the merger transaction was closed. Ree shares are reacting accordingly today.
