By midday today, the share price of Rivian Automotive (RIVN -4.83 percent) had dropped 7.5%.
The market is clearly becoming more concerned about what the electric vehicle (EV) manufacturer may have to say when it releases its first-quarter results later today, even though a big stakeholder just acknowledged selling a sizeable amount of Rivian shares.
Lock-Up Period for IPOs
This implies that since CNBC revealed 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 forbids early investors from selling ownership in a company, expired, the price of Rivian has been dropping sharply this week.
Ford confirmed that it had indeed sold 8 million shares of Rivian the day before at a price of $26.80 in a regulatory filing on May 10. Ford lost a lot of money in the first quarter due to a sharp decrease in the stock price of Rivian, and many people thought Ford would sell its stake to stop future losses.
Amazon invested in Rivian very early.
Investors are now worried that this may only be the beginning due to Ford’s continued ownership of 94 million shares of Rivian. Even worse, Amazon owns more than 160 million shares of the company that produces electric vehicles. Amazon invested in Rivian early on and, like Ford, suffered a sizable loss on its investment in Q1.
The timing of Ford’s selling couldn’t have been worse: Due to the volatile stock markets, investors are staying away from growth companies like Rivian, which is anticipated to release its Q1 earnings today after the market closes.
Expectations are generally low. Due to supply constraints, Rivian already decreased its production projection for the entire year from the 50,000 vehicles it had initially planned to produce and deliver to 25,000 vehicles.
Cost pressures have been worse since the fourth quarter as a result of the conflict between Russia and Ukraine. Therefore, Rivian’s Q1 production numbers would not be promising either, and its losses could rise.
As evidence of the great demand for Rivian’s R1T pickup truck and R1S SUV, the company disclosed that as of March 8, it had received roughly 83,000 preorders for both models combined. Furthermore, Amazon has already placed orders with Rivian for 100,000 electric delivery vans (EDVs).
Capital is currently Rivian’s key competitive advantage over the bulk of other EV start-ups. Rivian had just under $18.4 billion in cash on hand at the end of the fourth quarter.