Rivian stock plunges as IPO lockup expires, allowing Ford, Amazon to sell shares

Shares of Rivian Automotive Inc. plunged 21 percent as some early stakeholders get their first chance to unload shares on Monday. The shares closed Monday at $22.78.

Selling restrictions on certain Rivian insiders and investors ended on Sunday, freeing up a sizable chunk of the EV maker’s float for public trading. The stock had already collapsed 82 percent from its November high through Friday. Now, the focus turns to the company’s two most prominent corporate backers -- Amazon.com Inc. and Ford Motor Co. -- 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 percent of Rivian, while Ford owns 11.4 percent.

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 eight 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 on May 1. Ford, which invested $1.2 billion in Rivian, has been non-committal 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. 

Rivian shares have been sinking after a sharp post-IPO surge

“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 e-commerce giant to reduce its stake, pointing to its order of 100,000 Rivian electric delivery vehicles. Indeed, in its statement to Bloomberg Amazon said that 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 12.8% stake, through Global Oryx -- making it the third biggest holder in the company after T Rowe Price Group Inc. 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 policy makers 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 $25 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 material 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 Inc., Coinbase Global Inc., Coupang Inc., Didi Global Inc., Globalfoundries Inc., Nu Holdings Ltd. and Bumble Inc. 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.