Ford Selling Off Rivian Stock: Could This Mean No Further Collaboration?
Ford's decision to sell off their Rivian stock is likely due to the fact that they view Rivian as a competitor rather than a partner. Ford initially invested in Rivian in 2019, purchasing 102 million shares for approximately $5 per share. They then made another investment of 901 million in 2021, bringing their total investment to 1.4 billion. This means that even at current prices of around $25 per share, Ford has still made a 400% return on their initial investment.
Ford is not in the business of investing and thus would prefer to have less volatile stocks affecting their financials quarter to quarter. Additionally, with Ford now producing EVs such as MachE and F150, it may no longer make sense for them to have a stake in Rivian who produces electric vehicles such as Ranger pickup.
It appears that Ford was looking to gain some ideas and information from Rivian when they first invested and now that they have achieved this goal, there is no need for further collaboration between the two companies. This could explain why Ford is selling off its Rivian stock.
In conclusion, while investors may be disappointed by Ford's decision to sell off their Rivian stock, it makes sense for the company given their current situation. With the help of Ford's investments, Rivian has been able to get production online and can now look forward to a bright future if they continue to ramp up and deliver what they have promised so far.
Why do you think Ford keeps selling Rivian stock?
Ford had invested $500MM in Rivian in 2019, and another 901 million in 2021 for a total investment of 1.4 billion. They are still making money on the investment, but they are not selling Rivian to raise funds. It is likely that Ford was caught off guard by the interest in EVs and just moved all their plans up in manufacturing them, and now that getting production online is finished, no joint vehicle and Ford decided to do a full press with EVs, so they would rather not have such a volatile stock affect their financials quarter to quarter.
What did Ford get from their initial investment?
For their initial investment of $500MM, Ford received approx. 102MM shares or about $5 per share. Even at $25 per share, they made a 400% profit on their initial investment.
How much did Ford pay per share?
Ford paid 13.735 per share. This is a significant premium to the $4.50 per share that Rivian was trading at prior to Ford's investment.
What other benefits did Ford receive from their investment?
In addition to the financial benefit, Ford also gained access to Rivian’s technology and engineering capabilities. This allowed them to accelerate their own EV development plans and get into production faster than they would have been able to do on their own.
How has the stock price of Rivian changed since Ford's investment?
Since Ford's initial investment in 2019, the stock price of Rivian has increased significantly. It started at around $4.50 per share and is currently trading at around $25 per share. This represents an increase of over 500%.