Rivian Made Ford Billions. But Ford Can’t Sell Yet and a Loss Might Be Coming.

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Regardless of latest inventory volatility,

Ford Motor

is making a mint on its funding in electrical truck startup

Rivian Automotive
.
That’s nice for Ford traders, however there’s an even bigger Rivian-related difficulty they need to wrestle with: Now that Rivian is a publicly traded inventory, what do Ford executives plan to do with their Rivian stake?

Ford (ticker: F) introduced it will file an $8.2 billion acquire on its funding in Rivian (RIVN) when the Detroit auto maker reviews its fourth-quarter monetary figures.

It’s an enormous sum that works out to greater than 8% of Ford’s present market capitalization. Ford inventory, nonetheless, isn’t shifting as a result of, in fact, traders have lengthy identified how a lot Rivian inventory Ford owns: about 100 million shares.

Ford inventory was down about 0.1% in premarket buying and selling.

S&P 500
and

Dow Jones Industrial Common
futures have been up about 0.2% and 0.1%, respectively.

Ford’s Rivian stake was price about $10.6 billion on the finish of 2021. Rivian shares closed at $103.69. Rivian inventory, nonetheless, has had a rocky begin to the 12 months, hit by a slower-than-expected manufacturing ramp-up in addition to the selloff in different extremely valued development shares.

Coming into Wednesday buying and selling, the

Nasdaq Composite
has fallen about 7.3% to this point in 2022.

At Rivian’s present worth of $73.16, Ford’s stake is price about $7.5 billion. If Rivian closes the primary quarter at that stage, Ford must file a lack of roughly $2 billion.

That loss, nonetheless, wouldn’t transfer Ford inventory when introduced as a result of traders can mark Ford’s Rivian stake to market on a regular basis. What would possibly transfer Ford inventory is any determination Ford makes whether or not to carry or promote its Rivian inventory. Nobody is aware of precisely what Ford’s plans are simply but.

Ford can’t promote Rivian inventory for 180 days following the Rivian preliminary public providing. Meaning the earliest Ford can promote is round Might 9, 2022.

What to do with Rivian will probably be one of many massive selections Ford administration has to make in 2022. It’s a one-time determination although. Long term, all the choices about product lineups and car electrification will matter extra to Ford traders.

Along with the Rivian acquire, Ford outlined a number of different accounting objects. There will probably be a $3.5 billion acquire from pension accounting, a $3.6 billion tax accounting acquire in addition to a $1.7 billion loss related to debt reimbursement fees.

Write to Al Root at allen.root@dowjones.com