Ford simply reported a $3.1 billion loss. Blame Rivian

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CNN Enterprise

Within the days after its November IPO, electrical truck maker Rivian was briefly one of many world’s most dear automakers regardless of not but having reported a single sale. However its inventory has been sliding steadily since then, which simply resulted in a large loss for…..Ford?

Sure, that’s proper. Ford

(F), which has been making vehicles and vans for greater than a century and has truly offered extra electrical autos than Rivian, simply reported a loss due to the slide in Rivian inventory.

You see Ford, together with Amazon

(AMZN), was an early backer of Rivian, which was based in 2009 and went public final yr. Ford invested $500 million within the startup firm again in April 2019, when the 2 firms introduced plans to develop electrical vans collectively. These plans by no means got here to fruition, however Ford stored its funding in place.

And regardless of the inventory’s slide over the past 5 months, it’s in all probability glad that it did.

Rivian’s IPO in November was an enormous hit, elevating $12 billion for the corporate within the greatest public providing since Fb’s debut in 2012. Everybody needed to get in on what may very well be the following Tesla

(TSLA), and so they all thought that Rivian would possibly simply be the corporate to take action. Shares extra the doubled within the first week of buying and selling, making it extra precious than any automaker on the planet aside from Tesla

(TSLA) and Toyota


Then actuality set in.

A few weeks later, Ford and Rivian introduced they might not be engaged on a truck collectively, sending shares of Rivian plunging as a lot as 17% in a single day. In December it introduced plans for a second manufacturing unit, nevertheless it additionally reported that preliminary gross sales of its electrical pickup fell in need of expectations. The corporate’s shares continued their-post IPO decline, falling 10% in a day.

By the tip of 2021, Rivian shares had been 40% decrease than they’d been from their highest shut the week after the IPO. Nonetheless, it was price about $92 billion, or about $10 billion greater than Ford itself was price. That meant that Ford’s preliminary $500 million funding in Rivian was price $10.6 billion. And so it was that Ford reported a acquire on that funding of $9.1 billion for the yr.

Rivian’s shares proceed to slip as provide chain issues made buyers cautious of any automaker not named Tesla, whether or not they had been making both electrical or gasoline powered autos.

Thus far this yr, Rivian shares are down 70% by means of Wednesday’s shut. So Wednesday afternoon Ford introduced it had taken a $5.4 billion pre-tax cost associated to its funding in Rivian, which had misplaced about half of its worth throughout the course of the primary quarter.

And that resulted in Ford reporting a $3.1 billion internet loss. It might have had a $1.6 billion revenue with out particular costs.

That $1.6 billion revenue, excluding particular objects, was a bit higher than Wall Road forecasts, though it was down 44% from what it reported on that foundation a yr earlier. Auto income of $32.1 billion was down 4%, though it beat forecasts by about $1 billion.

As was the case all through the auto trade, Ford’s provide chain issues, equivalent to a scarcity of pc chips, restricted the variety of autos it may make and promote. In reality it had 53,000 autos on the finish of the quarter that had been principally accomplished however awaiting set up of parts affected by the semiconductor provide scarcity. On Wednesday, Ford CEO Jim Farley described the outcomes as “blended.”

“The attraction of our new merchandise is absolutely clear, and prospects demand is extraordinarily sturdy past the provision constraint of our trade,” stated Farley on a name with buyers “Nonetheless, we’re nonetheless grappling with persistent provide chain points that forestall us from posting even stronger quarter.”

On Wall Road, which had feared the worst, buyers shrugged off Ford’s cost for Rivian and centered on its higher than anticipated outcomes. And thus Ford shares edged up greater than 1% in after-hours buying and selling.

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