So much for the search for the next Tesla.
This is what most are hunting. We repeatedly hear about finding the "next Tesla" or "next Amazon". For a while, many thought that Rivian would step up in the EV market to rival Tesla.
They still might.
If they do, it will be without Ford, or at least that company having a smaller holding.
It was announced that Ford would sell 8 million shares as the lock up period ends.
The Leader In EV Pickups
One could say that Rivian is the leader in EV pickups. They expect to sell 25K this year. The stock got hammered when that number was announced, since it was half of the expected 50K the company originally forecast for 2022.
Supply chain issues were blamed for the reduction.
Rivian is one of the few companies to be producing electric pick up trucks. Ford has its electric version of the F-150 but is not making it in great quantities. Tesla, the presumed leader, has well over 1 million orders for its hotly anticipated Cybertruck.
Total production thus far: zero (outside some demo models).
Therefore, we are not looking at a heavily populated market at this point. It was the ideal opportunity for Rivian.
So why is Ford dumping the stock?
To be fair, it holds over million shares in Rivian so this is only a small percentage. The move, however, is telling. At the end of last year, Jim Farley said the two companies were not jointly working together.
Nevertheless, we have seen a big fall in the stock. The high flyer during the 4th quarter came crashing back to reality.
JPMorgan Selling Too
Ford is not the only one taking advantage of the ending of the lockup period. JPMorgan is also selling.
According to CNBC, the bank's sale is larger than Ford's.
JPMorgan Chase also plans to sell a Rivian share block of between 13 million and 15 million for an unknown seller, sources told Faber.
The question is whether this is much of an indictment on the company. With a bank, it is not uncommon for them to sell shares, especially those received in the IPO process. Here, JPMorgan could simply be looking to add cash to their balance sheet. After all, holding such a large share of a volatile stock isn't in keeping with sound banking practices.
Turning to a cash position for the bank makes sense. Interest rates are up and they could turn that money into a higher return than a couple months ago.
The question centers on Ford. Here is a company that is not killing it in the automotive industry. Their sales are in declines, a trend that started half a decade ago. In the EV market, Tesla is the undisputed leader in the West, rivaled only by the Chinese companies. Legacy auto is getting crushed by the EV maker.
Jim Farley seems intent on turning the company around while embracing the switch to electric. With such a stake in Rivian who, from all reports, have a strong product, one would think the alliance would grow.
Yet it seems that Ford is stepping away, looking to go it alone.
Does it know something? Maybe Farley is aware of some issues that most do not see.
Whatever the motivation, we should not be surprised if Ford ends up selling more shares as time passes. The interest does not appear to be there.
Ford invested over $1.2 billion in the start up company. The sale of 8 million shares will net more than $200 million. With the remaining holdings, Ford still stands to come out ahead.
Perhaps it is nothing more than a cashflow issue. Ford has not been killing it so the extra liquidity won't hurts its balance sheet.
Always fun times in a new market like electric vehicles.
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