Multiple analysts have slashed their price targets on the electric vehicle (EV) stock in the past few days, and Rivian, which started delivering its flagship R1T pickup trucks only recently, is also recalling nearly 500 trucks for faulty airbags. Yet, these factors aren't mainly why Rivian shares are falling today.
One of the biggest reasons why Rivian shares crashed early last week was a stake sale by one of its early investors, the auto giant Ford (F -1.11%).
Ford, which owned nearly 102 million shares in Rivian, suffered a huge loss in its first quarter as the value of its investment in the EV maker slumped as Rivian shares plunged during the period. Amazon is an early investor in Rivian with nearly 160 million shares.
In a move that's seen as an attempt to cut future potential losses, Ford sold 8 million shares in Rivian at a price of $26.80 per share on May 9. I expected Ford to sell more, and that's what's happened -- Ford sold another 7 million shares in Rivian on May 13 at a price of $26.88 per share.
Last week, Rivian revealed plans to launch a midsize affordable SUV to be built at a new plant in Georgia. Rivian also said it is confident of manufacturing 25,000 EVs this year -- a figure it first announced in March at a time when analysts expected the company to produce at least 40,000 vehicles this year.
Investors scooped up Rivian's beaten-down stock on these developments, but one fear overhangs -- that of early investors like Ford and Amazon dumping their stake. If and when they do, Rivian shares will come under selling pressure like the one they saw today.