Ford just reported a $3.1 billion loss. Blame Rivian


Yes, it’s true. Ford (F)which has been making cars and trucks for more than a century and has actually sold more electric vehicles than Rivian, just reported a loss due to Rivian’s declining stock.
You see Ford, with Amazon (AMZN), was an early backer of Rivian, which was founded in 2009 and went public last year. Ford invested $500 million in the startup in April 2019, when the two companies announced plans to develop electric trucks together. These plans never materialized, but Ford kept its investment in place.

And despite the stock falling over the past five months, he’s probably glad that’s the case.

Rivian’s IPO in November was a huge success, raising $12 billion for the company in the biggest public offering since Facebook’s debut in 2012. Everyone wanted in on what could be the next Tesla, and they all thought Rivian might just be the company. do this. Shares more than doubled in the first week of trading, making it more valuable than any automaker on the planet other than You’re here (TSLA) and Toyota (MT).

Then reality set in.

A few weeks later, Ford and Rivian announced that they would not be working on a truck together, sending Rivian shares down as much as 17% in a single day. In December, it announced plans for a second plant, but it also reported that initial sales of its electric pickup fell short of expectations. Shares of the company continued to slide after the IPO, dropping 10% in one day.
At the end of 2021, Rivian shares were 40% lower than they had been from their high close the week after the IPO. Still, it was worth around $92 billion, about $10 billion more than Ford itself. This meant that Ford’s initial $500 million investment in Rivian was worth $10.6 billion. And so it was that Ford announced a gain on that investment of $9.1 billion for the year.
Rivian shares continue to slide as supply chain issues made investors wary of any automaker not named Tesla, whether it makes electric or gas-powered vehicles.

So far this year, Rivian shares are down 70% through Wednesday’s close. Thus, on Wednesday afternoon, Ford announced that it had taken a pretax charge of $5.4 billion related to its investment in Rivian, which had lost about half of its value during the first quarter.

And that led Ford to report a net loss of $3.1 billion. It would have made a profit of $1.6 billion without special charges.

That $1.6 billion profit, excluding special items, was a little better than Wall Street’s forecast, though it was down 44% from what it said on that basis a year earlier. early. Automobile revenue of $32.1 billion was down 4%, although it beat forecast by about $1 billion.

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As was the case throughout the auto industry, Ford’s supply chain issues, such as a shortage of computer chips, limited the number of vehicles it could manufacture and sell. In fact, it had 53,000 vehicles at the end of the quarter that were mostly complete but awaiting installation of components affected by the semiconductor supply shortage. On Wednesday, the CEO of Ford Jim Farley called the results “mixed”.

“The appeal of our new products is really clear, and customer demand is extremely strong beyond our industry’s supply constraint,” Farley said on a call with investors. “However, we are still struggling with ongoing supply chain issues that prevent us from releasing an even stronger quarter.”

On Wall Street, which had feared the worst, investors shrugged off Ford’s charge for Rivian and focused on its better-than-expected results. And so, Ford shares edged up more than 1% in after-hours trading.


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