The share price of Rivian Automotive (RIVN -4.83 percent) fell 7.5 percent by lunchtime today.
Even though a significant stakeholder just disclosed selling a significant amount of Rivian shares, it’s clear the market is growing increasingly concerned about what the electric vehicle (EV) manufacturer may have to say when it reveals its first-quarter results later today.
IPO Lock-Up Period
What this means is that the price of Rivian has been falling precipitously this week ever since CNBC reported over the weekend that Ford (F -1.39 percent) planned to sell 8 million shares in the EV soon after the 180-day Ipo lock-up period, which prevents early investors from selling stakes in a company, expired.
Ford’s regulatory filing on May 10 verified that the venerable manufacturer had, in fact, sold 8 million shares of Rivian the day before at a price of $26.80 per. A fast decline in Rivian’s stock price caused Ford to lose a significant amount of money during the first quarter, and many people anticipated that Ford would sell its interest to avoid further losses.
Amazon was an Early Investor in Rivian
However, because Ford still owns 94 million shares of Rivian, investors are now concerned that this may only be the beginning. Even worse, Amazon holds over 160 million shares of the electric vehicle manufacturer. Amazon was an early investor in Rivian and, like Ford, experienced a significant loss on its investment in Q1.
Ford’s sale couldn’t have come at a worse time: Investors are avoiding growth firms due to the unstable stock markets, and Rivian is expected to announce its Q1 earnings today after the market closes.
Low expectations prevail. Cost pressures have been worse since the fourth quarter due to the conflict between Russia and Ukraine, and Rivian already reduced its production forecast for the entire year from the 50,000 vehicles it had initially intended to make and deliver to 25,000 vehicles due to supply restrictions. As a result, Rivian’s Q1 production figures would not be very encouraging either, and its losses might increase.
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Last Words
Rivian’s R1T pickup truck and R1S SUV are in high demand, as evidenced by the company’s disclosure that as of March 8, it had received approximately 83,000 preorders for both models combined. Additionally, Rivian already has orders from Amazon for 100,000 electric delivery vans (EDVs).
Rivian now has one major edge over the majority of other EV start-ups: capital. At the end of the fourth quarter, Rivian had cash on hand of just under $18.4 billion.
