Rivian plunges another 21%
Expiring IPO rules free up about 720M shares; sell-off adds to 87% dip since 2021
Shares of Irvine-based Rivian Automotive sank 21% as some early stakeholders got their first chance to unload shares Monday.
Selling restrictions on certain Rivian insiders and investors ended Sunday, freeing up a sizable chunk of the electric-vehicle maker's float for public trading. The stock has collapsed 87% from its November high. Now, the focus turns to the company's two most prominent corporate backers — Amazon.com and Ford — and whether they start reducing their stakes.
About 720 million Rivian shares are estimated to have become eligible for sale as the market opened. The company had a float of about 182.5 million shares as of April 11, according to Bloomberg data. Amazon owns about 17.7% of Rivian, while Ford owns 11.4%.
Few on Wall Street expect Amazon to lighten its position, but Ford is a different story. On Saturday, CNBC's David Faber tweeted that Ford plans to sell 8 million Rivian shares through Goldman Sachs.
“We would not be surprised by a stake sale/reduction by Ford post-Rivian's lockup expiration,” Robert W. Baird analyst George Gianarikas wrote in a note May 1. Ford, which invested $1.2 billion in Rivian, has been noncommittal about its investment, and its own electric pickup truck, the F150 Lightning, is having early success, he said. Rivian is also making an electric pickup.
“We'll look at everything,” Ford CEO Jim Farley said of his company's Rivian stake in a Bloomberg TV interview in January. “Everything is on the table.”
“We haven't been/aren't presently commenting on Rivian, including about CNBC's report,” a Ford spokesman said Monday in an emailed statement.
Amazon also declined to comment on its plans. Gianarikas said he does not expect the ecommerce giant to reduce its stake, pointing to its order of 100,000 Rivian electric delivery vehicles. Indeed, in its statement to Bloomberg, Amazon said it was “committed” to work with Rivian to put those electric delivery vehicles on the road by 2030.
Abdul Latif Jameel, a Saudi Arabia-based group and an investor in Rivian, said it has no plans to sell shares. Jameel holds almost 114 million Rivian shares, or about a 12.8% stake, through Global Oryx — making it the third biggest holder in the company after T Rowe Price Group and Amazon.
Bottoming out
Rivian was the largest U.S. IPO of 2021. It went public amid great fanfare as investors thirsted for EV companies with a growing push from governments and policymakers around the world to move toward clean transportation options. Enthusiasm peaked within days of its Nov. 10 public debut, driving its market capitalization to over $150 billion.
Since then, however, the stock has cratered from a high of $172 on Nov. 16 to around $23 as market sentiment soured on riskier growth stocks, with rising inflation and Federal Reserve interest-rate hikes increasing the lure of haven assets. In addition, supply-chain shortages and soaring raw materials costs have crippled new EV companies, forcing them to lower production targets and making their valuations look even more expensive.
Of course, Rivian isn't the only IPO from last year that has faltered. Other high-profile stocks that made their trading debuts in 2021 like Robinhood Markets, Coinbase Global, Coupang, Didi Global, Globalfoundries, Nu Holdings and Bumble are deeply in the red this year.
While IPO lockup expiries typically lead to more volatility and weakness in stocks, they can have an upside.
At times they can serve as a “clearing event” by removing uncertainties, thereby driving the share price higher, Gianarikas said in an interview.
In addition, the stock's severe selloff could deter big stakeholders from selling near a low.
“As an investor Ford may be taking a longer-term view, and may not want to sell at the bottom,” Edward D. Jones analyst Jeff Windau said.