Everyone might have known that the initial public offering (IPO) lockup period for early investors in Rivian Automotive (RIVN -3.39%) was coming to an end. But no one knew whether big shareholders including Ford and Amazon would take the opportunity to sell their shares.
Ford and Amazon have stakes in Rivian representing about 11% and 18% ownership in the electric-vehicle (EV) start-up, respectively. After Ford sold 8 million of its 102 million shares, the stock plummeted this morning. But those companies have their own goals, with Ford being a rival of Rivian, while Amazon is a customer. Today's share drop is the kind of opportunity that investors should like if the underlying business isn't what's driving the move.
The Rivian R1S SUV. Image source: Rivian Automotive.
Investors shouldn't take Ford's share sale as a negative sign related to Rivian's business or potential success. It doesn't seem surprising that Ford would want to bank some gains from its early pre-IPO investment. Additionally, it still holds 94 million shares, so it was far from bailing completely on the stock.
Rivian stock has already been on an extended slide, having now dropped 76% so far in 2022 and trading at its all-time low. That is due to a combination of general market sentiment moving away from early technology names as well as business-specific challenges.
But rising costs, supply chain disruptions, and manufacturing start-up pains are all likely to abate. The company itself is also looking beyond just near-term issues. It recently received $1.5 billion of incentives, including tax breaks, to support its plans for a new $5 billion factory in the state of Georgia. Once operating, that will give the company annual production capacity of about 600,000 vehicles.
That will satisfy demand that already includes more than 83,000 pre-orders of its pickup trucks and SUVs as well as 100,000 electric delivery vans for Amazon. While today's drop could be a buying opportunity, some investors might also want to wait until Wednesday, May 11, when Rivian reports its first-quarter financial and operational update after the market close.
