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Rivian Was Ford's Best Investment Despite Stock Falling, Expect $8 Billion Gain in Q4

Ford invested $800 million in Rivian before the company went public in November last year. It turns out the venture was quite successful, as Ford announced it expects an $8.2 billion gain on its investment for the fourth quarter of 2021.
Rivian was Ford's best investment despite stock falling 6 photos
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That’s not bad at all and reveals an excellent outcome on “timing the market”, as Rivian stock went down this month. Ford’s financial results point to selling Rivian shares just before the market went haywire in January. It might be an incredibly lucky move or it might also mean Ford contributed to this outcome by withdrawing from a partnership to co-develop electric vehicles. We will probably find out Ford actually bought back Rivian shares in January at a more favorable price.

According to Automotive News, Ford owned a 12% stake in Rivian at the time of the IPO and sold just enough shares to amass more than $8 billion in its coffers at the end of the year. We don’t know how much stock Ford sold, but we know Rivian’s market cap surpassed $120 billion in November. This means probably Ford still owns a sizeable chunk of Rivian.

Despite the fact both companies canceled plans to jointly develop a vehicle, Ford CEO Jim Farley told Automotive News he is happy with the investment. Now we know why and this is also making us believe Ford will keep buying Rivian stock while the market is down. And he should, as the electric pickup truck maker has a solid proposition in the market.

Being an EV startup is a risky business and we’ve seen these failing more than once. Take Lordstown Motors, for instance, they appear to be out of business after a series of misfortunes. Nikola also had its fair share of controversies, but Rivian appears to be the real deal. They have solid products and successfully established a market niche as adventure EVs, while also joggling tasks to deliver the electric vans Amazon needs. Rivian also invests $5 billion in building a new plant to keep up with the demand for its vehicles.

Of course, anything can happen and there is no guarantee things will keep going in the right direction indefinitely. But for now, Rivian expands at a healthy pace and most importantly it makes investors happy by offering them huge returns on their investments.

 
 
 
 
 

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