How Ford Played a Role in Rivian Stock Drop and Future Implications

Sep 29, 2020 Palo Alto / CA / USA - Rivian headquarters in Silicon Valley; Rivian Automotive Inc is an American automaker and automotive technology company that develops electric vehicles.
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Electric vehicle company Rivian saw its stock crash following the announcement that Ford was selling 8 million shares. The stock closed down 21% on May 9 and was down 3% on May 10 in pre-market trading.

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The stock is down 78% year to date.

CNBC reported that Ford — which owns 102 million shares of Rivian — would sell 8 million of them through Goldman Sachs and that JPMorgan Chase also plans to sell between 13 million and 15 million shares for an unknown seller.

Garrett Nelson, equity analyst at CFRA Research, wrote in a note that the fact that Ford may be planning to sell just days ahead of Rivian’s first quarter earnings release and operational update, and after a precipitous drop for Rivian shares, is adding downward pressure to the stock.

“Over the weekend, reports surfaced that Ford (F) is planning to sell 8M of the roughly 102M Rivian shares the company owns following this week’s expiration of its post-IPO lockup,” Nelson wrote in the note sent to GOBankingRates.

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“The news is not surprising to us, especially after the two companies terminated a partnership to jointly develop an EV last November and as Ford begins deliveries of the F-150 Lightning, a direct competitor to Rivian’s R1T pickup truck.”

Nelson added that the macro backdrop remains difficult for unprofitable, consumer discretionary names — particularly those exposed to supply-chain and chip issues.

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“With RIVN expected to post an adjusted EBITDA loss of $4.75B in 2022, we continue to prefer auto manufacturer names such as Tesla (TSLA) and Ford,” he said.

Rivian went public on Wednesday, Nov. 10, 2021, in what turned out to be 2021’s biggest initial public offering, as GOBankingRates previously reported. The IPO also placed the company as the second-largest U.S. carmaker, behind Tesla.

Rivian shares were up 57% in their first two days on the Nasdaq. Rivian ended its first day as a public company valued at almost $88 billion, more than tripling its last private valuation. However, shortly after, its stock crashed following the announcement that it no longer planned to co-develop an EV with Ford. Ford had invested $500 million in Rivian in May.

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“We respect Rivian and have had extensive exploratory discussions with them, however, both sides have agreed not to pursue any kind of joint vehicle development or platform sharing,” Ford said at the time.

CFRA Research said it maintained its “hold” opinion on Rivian, but it lowered its 12-month target to $25 from $40.

Rivian is set to report its first-quarter earnings on May 11.

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About the Author

Yaël Bizouati-Kennedy is a full-time financial journalist and has written for several publications, including Dow Jones, The Financial Times Group, Bloomberg and Business Insider. She also worked as a vice president/senior content writer for major NYC-based financial companies, including New York Life and MSCI. Yaël is now freelancing and most recently, she co-authored  the book “Blockchain for Medical Research: Accelerating Trust in Healthcare,” with Dr. Sean Manion. (CRC Press, April 2020) She holds two master’s degrees, including one in Journalism from New York University and one in Russian Studies from Université Toulouse-Jean Jaurès, France.
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