(Bloomberg) — Rivian Automotive Inc. shares are plummeting more than 15% as some early adopters get their first chance to sell shares on Monday.
Sale restrictions on certain Rivian insiders and investors ended on Sunday, freeing up a sizable chunk of the electric vehicle maker’s free float for public trading. The stock had already plunged 82% from its November high through Friday. Attention now turns to the company’s two most prominent corporate backers, Amazon.com Inc. and Ford Motor Co., and whether they begin to reduce their holdings.
Around 720 million Rivian shares are estimated to have become eligible for sale when the market opened. The company had a float of about 182.5 million shares as of April 11, according to data from Bloomberg. Amazon owns about 17.7% of Rivian, while Ford owns 11.4%.
Few on Wall Street expect Amazon to lighten its footing, but Ford is a different story. On Saturday, CNBC’s David Faber tweeted that Ford plans to sell eight million Rivian shares through Goldman Sachs.
“We would not be surprised by a sale/reduction of stake by Ford after the expiration of the Rivian block,” Robert W. Baird analyst George Gianarikas wrote in a May 1 note. Ford, which invested $1.2 billion in Rivian, hasn’t committed to its investment and its own electric pickup, the F150 Lightning, is seeing early success, he said. Rivian is also making an electric pickup truck.
“We’ll look at everything,” Ford CEO Jim Farley said of his company’s involvement in Rivian in a Bloomberg television interview in January. “Everything is on the table.”
“We have not/are not currently commenting on Rivian, including the CNBC report,” a Ford spokesman said Monday in an emailed statement.
Amazon also declined to comment on its plans. Gianarikas said he doesn’t expect the e-commerce giant to cut back on his share, pointing to its order for 100,000 Rivian electric delivery vehicles. In fact, in its statement to Bloomberg, Amazon said it was “committed” to working with Rivian to put those electric delivery vehicles on the road by 2030.
Rivian was the largest U.S. IPO of 2021. It went public amid great fanfare as investors coveted electric vehicle ventures with growing push from governments and lawmakers around the world to move towards clean transport options. The hype peaked within days of its public debut on November 10, bringing its market capitalization to over $150 billion.
Since then, however, the stock has tumbled from a high of $172 on Nov. 16 to around $25, as market sentiment soured on riskier growth stocks, with inflation rising and Federal Reserve interest rate hikes increasing the attractiveness of safe-haven assets. In addition, supply chain shortages and rising raw material costs have crippled electric vehicle startups, forcing them to lower production targets and making their valuations look even more expensive.
Of course, Rivian isn’t the only IPO of the past year that has failed. Other high-profile stocks that made their trading debut in 2021 like Robinhood Markets Inc., Coinbase Global Inc., Coupang Inc., Didi Global Inc., Globalfoundries Inc., Nu Holdings Ltd. and Bumble Inc. are deep in the red this year. .
While IPO lock-in expirations typically lead to increased volatility and weakness in stocks, they can have an upside. They can sometimes serve as an “offsetting event” by removing uncertainties, which drives up share prices, Gianarikas said in an interview.
In addition, the strong sell-off in shares could deter large shareholders from selling near a bottom.
“As an investor, Ford may be taking a longer-term view and may not want to sell into the fund,” said Jeff Windau, an analyst at Edward D. Jones.
(Update stock movement in the first paragraph, stock price in the tenth.)
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