What happened

Rivian Automotive (RIVN -12.05%) stock crashed yet again today, tumbling 7.5% by noon. It's evident the market is increasingly worried about what the electric vehicle (EV) manufacturer may have to say later today when it releases its first-quarter numbers even as a large shareholder just confirmed having dumped a big block of Rivian shares.

So what

Rivian stock has been in a free fall this week ever since CNBC reported this past weekend that Ford (F 0.17%) was planning to sell 8 million shares in the EV soon after the expiry of the 180-day initial public offering lock-up period that prevents early investors from selling stake in a company.

Ford's regulatory filing on May 10 confirmed the the legacy automaker had indeed dumped 8 million shares in Rivian at a price of $26.80 per share the previous day. Ford suffered a huge loss in its first quarter as the value of its investment in Rivian eroded thanks to a free fall in the latter's stock price, and many expected Ford to offload its stake to prevent future losses.

A Rivian 2022 R1T pickup truck.

Image source: Rivian Automotive.

Investors, though, are now worried this could just be the beginning, as Ford still owns 94 million shares in Rivian. Worse yet, Amazon, which is also an early investor in Rivian and like Ford suffered a big loss on its investment in Q1, also owns nearly 160 million shares in the EV maker.

The timing of Ford's sale couldn't have been any worse: The stock markets are on slippery ground, investors are fleeing growth stocks, and Rivian is scheduled to release its Q1 earnings after market close today.

Expectations are muted. Cost pressures have worsened since the fourth quarter amid the Russia-Ukraine conflict, and Rivian already cut its production estimate for the full year to 25,000 vehicles because of supply constraints from the 50,000 units it originally planned to produce and deliver. That means Rivian's production numbers in Q1 may not be too encouraging, either, and its losses could rise.

To be sure, demand for Rivian's R1T pickup truck and R1S SUV are strong, with the company revealing it had secured nearly 83,000 preorders between R1T and R1S as of March 8. That's on top of the orders for 100,000 electric delivery vans (EDVs) Rivian already has from Amazon.

Now what

Rivian has one key advantage over most other EV start-ups: cash. Rivian holds nearly $18.4 billion in cash as of the end of the fourth quarter.

Yet Rivian has a tall task ahead of it as it tries to ramp up production and fulfill its EDV delivery commitments to Amazon amid intense cost pressures. Rivals are racing ahead in the game as well, with Ford having started deliveries of its much-awaited all-electric F-150 Lightning pickup trucks this month. While some, like analyst Adam Jonas from Morgan Stanley (MS 0.81%), still see nearly 300% upside in Rivian shares, the EV maker will need to work really hard to see its stock command such a premium again.