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Ford Motor Company’ emblem
Jeff Kowalsky/AFP by way of Getty Images
Despite latest inventory volatility,
Ford Motor
is making a mint on its funding in electrical truck startup
Rivian Automotive
.
That’s nice for Ford buyers, however there’s an even bigger Rivian-related subject they must 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 experiences 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, nevertheless, isn’t shifting as a result of, after all, buyers have lengthy recognized how a lot Rivian inventory Ford owns: about 100 million shares.
Ford inventory was up 0.6% in early buying and selling Wednesday. The
S&P 500
and
Dow Jones Industrial Average
have been up about 0.7% and 0.5%, respectively.
Ford’s Rivian stake was value about $10.6 billion on the finish of 2021. Rivian shares closed at $103.69. Rivian inventory, nevertheless, has had a rocky begin to the yr, 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% thus far in 2022.
At Rivian’s present worth of $73.16, Ford’s stake is value about $7.5 billion. If Rivian closes the primary quarter at that degree, Ford must file a lack of roughly $2 billion.
That loss, nevertheless, wouldn’t transfer Ford inventory when introduced as a result of buyers can mark Ford’s Rivian stake to market on a regular basis. What may transfer Ford inventory is any choice Ford makes whether or not to carry or promote its Rivian inventory. No one 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. That means the earliest Ford can promote is round May 9, 2022.
What to do with Rivian shall be one of many large choices Ford administration has to make in 2022. It’s a one-time choice although. Longer time period, all the selections about product lineups and car electrification will matter extra to Ford buyers.
In addition to the Rivian acquire, Ford outlined a number of different accounting objects. There shall 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 costs.
Write to Al Root at allen.root@dowjones.com