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Why Rivian Automotive Inventory Crashed Monday

Why Rivian Automotive Inventory Crashed Monday

What occurred

Rivian Automotive (RIVN -18.30%) inventory has been falling all yr, coming into this week down greater than 70% yr up to now. A number of the latest drop might have been in anticipation of the expiration of the lockup interval that occurred this weekend. After the electrical car (EV) maker’s preliminary public providing (IPO) on Nov. 10, 2021, early buyers have been required to carry onto shares for a interval of 180 days. However Rivian shares tumbled right this moment on the primary buying and selling day after that expiration, down 16.6% as of 10:58 a.m. ET. 

So what

It wasn’t simply the lockup expiration that has buyers promoting this morning, although. Over the weekend, CNBC’s David Faber reported that Ford will probably be promoting a few of its stake in Rivian. Ford was an early investor in Rivian, holding 102 million shares, or about 11%, within the firm. Faber reported that Ford has lined up a sale of 8 million on these shares.

Rivian trucks lined up in parking lot.

Picture supply: Rivian Automotive.

Now what

Rivian shares went public at a value of $78 per share and greater than doubled from there shortly after the IPO. However the inventory closed Friday at slightly below $29. Ford offered the 8 million shares at $26.90 per share, in accordance with the report. 

Ford reportedly nonetheless made a hefty revenue on the shares it already offered, although, and that block of shares solely represents about 8% of its holdings. It isn’t stunning that Ford wished to boost some money from the funding as it’s working to ramp up its personal electrical car manufacturing because it transitions from internal-combustion-powered automobiles and vehicles. 

The report additionally recognized one other block of 13 million to fifteen million shares which are being supplied by an unknown vendor, nonetheless. The information — and flood of recent shares available on the market right this moment — has Rivian inventory plunging right this moment.