Ford Sells Almost 8% in Electric Truck Developer Rivian Automotive as Soon as Allowed

Electric truck developer Rivian Automotive raised $11.9 billion to become the largest IPO of 2021. RIVN stock surged as high as $179 per share before crashing in 2022 to $20.88 on Monday following the expiration of the company’s IPO lockup period. Ford Motor sold off about 8% of its stockholdings pushing shares to an all-time low.

Ford stock sold off also, down nearly 6% on the day. At one point Ford and Amazon had booked massive unrealized profits on their investment in the car company.

Rivian truck

Rivian Automotive listed on the Nasdaq under the symbol RIVN.

Rivian’s stock has been hit like most in the NASDAQ market however it has also been sliding that began earlier this year as the company has had to curtail factory production due to supply-chain challenges. EV makers have been under pressure to raise prices to counter fast-rising raw-materials costs for key battery inputs, such as lithium, cobalt and nickel.

The lockup period for Rivian investors to sell stock after its initial public offering in November expired Sunday. Before the sale, Ford held about 102 million shares in Rivian overall, about 11.4% of the company. Ford and Rivian declined to comment.

Ford sold about 8 million shares between late Sunday and Monday morning through Goldman Sachs, familiar with the move said. Ford is no longer partnering to develop an EV with Rivian, as had been planned under its initial investment in 2019 and wants to gradually reduce its stake in what has become a rival in the electric-truck market sources said.

The potential windfall from Ford’s stake in Rivian has plunged along with the stock price since the startup’s November IPO. In 2021, Ford said the rise in Rivian’s stock price resulted in an $8.3 billion paper gain. Rivian’s stock selloff in recent months was a drag on Ford’s first quarter, shaving $5.4 billion from its bottom line and resulting in a net loss for the auto maker.

CNBC also reported JPMorgan Chase was planning to sell between 13 million and 15 million Rivian shares for an undisclosed stakeholder.

Ford has been aggressive in expanding its own lineup of electric vehicles, having recently started production of its own battery-powered pickup, the F-150 Lightning. The Lightning is a direct competitor to one of Rivian’s first models, the all-electric R1T pickup, which went on sale late last year.

Rivian reported around 83,000 reservations at the end of March, it is having trouble getting its factory in Normal, Ill., operating at full speed. The former Mitsubishi Motors Corp. plant can produce 150,000 vehicles a year but is currently producing around 1,000 of the vehicles a month.

On March 1 Rivian told customers with reservations for vehicles that it would have to increase prices retroactively, only to later walk back the price increase after the move stoked a backlash. The company still plans to increase prices for future purchasers, but only on reservations placed after March 1.

Rivian has blamed its production woes on the global semiconductor shortage. In March, Rivian slashed its production plans for the year, saying it would aim to produce 25,000 vehicles this year, half of what it would have otherwise been able to build. Rivian also has a deal to supply 100,000 battery-powered delivery vans to Amazon.com Inc. Amazon was, like Ford another investor in Rivian. Amazon owned 17.74 million Rivian shares as of Dec. 31, according to FactSet. An Amazon spokesperson declined to comment on its holdings.

Rivian IPO

Rivian Automotive is a founder-led company and manufactures premium electric SUVs, vans, and pickup trucks, raised $11.9 billion by offering 153 million shares at $78, above the upwardly revised range of $72 to $74. The company offered 18 million more shares than anticipated. It originally planned to offer its shares at $57 to $62, before raising the range this past Friday. New and existing investors had indicated on $5 billion worth of shares in the offering (42% of the deal).

At $11.9 billion, Rivian was the largest IPO of 2021, and the largest IPO since Alibaba (NYSE: BABA) in 2014.

Although the company is in very early stages of commercialization, Rivian began its first deliveries in September of 2021, Rivian is the first automaker to bring a battery-electric pickup to market in the U.S.  It’s also on track to make the most of its first-mover advantage when it starts deliveries of the R1S sport utility vehicle this year, giving it a lead in the market for full-size battery-electric SUVs and has an order of 100,000 EDVs from Amazon through 2025 the internet giant owns a 20 percent stake in Rivian.

Day 1 for Rivian began trading at $106, up 36% from its offering price of $78 a share $RIVN reached a high of $119.38 at 10:15 a.m. PT/1:15 p.m. ET, and was at $100.73/share when markets closed at 1 p.m. PT/4 p.m. ET.

RIVN Day 1

In September 2021, Rivian began making deliveries of its first-generation consumer vehicle, the R1T, a two-row five-passenger pickup truck priced at around $70,000. The company also plans to launch the R1S, a three-row seven-passenger SUV, in December 2021. At quarter-end, it had approximately 48,000 preorders for the consumer vehicles with $1,000 refundable deposits. In the commercial market, Rivian collaborated with key investor Amazon.com to develop an electric delivery van with an initial order volume of 100,000 vehicles.

The IPO was run by Morgan Stanley, Goldman Sachs, J.P. Morgan, Barclays, Deutsche Bank, Allen & Company, BofA Securities, Mizuho Securities, and Wells Fargo Securities who acted as joint bookrunners on the deal.

The market cap of Rivian was over $85 Billion on Day 1, making it the third biggest auto maker in the US.

Rivian Day 1 Market Cap

While demand for Rivian’s products will likely outweigh supply for a number of years, the company faces a “natural ceiling” of 300,000 to 400,000 units per year, New Street Research analyst Pierre Ferragu wrote in a note Monday.

That’s partly down to price: Rivian’s R1T truck starts at $67,500 for the most basic model, while its upcoming sport utility model is $70,000. “Above $70,000, the global addressable market for Rivian’s SUV and pickup is less than 1.5 million units, and it will be a crowded space,” Ferragu wrote.

IPO Ahead W 11 5 2021

 Source: Renaissance Capital

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