DuckTruck
Well-Known Member
I agree with much of what you've said here, but it is noteworthy that Ford's financials from October of 2021, long after their investment in Rivian, show they have around $35 Billion in cash. Of course, they'll do what's best for them, but I don't see their shareholders necessarily looking at a long-term investment in a holding like Rivian as bad, unless they think it won't grow over time. As alluded to by Forbes a few years back, the Ford family owns less than 2% of their namesake automaker, but they still have firm control with about 40% of the voting power by holding a special class of stock.Yes, but most, if not all, of their investment was made more than a year ago in private rounds.
Even if it were the best thing to do financially, I can't see Ford holding on to the shares long term. The optics of holding a large stake in a competing manufacturer wouldn't sit well with shareholders. If they ever had to raise capital, the first question would be why don't you just sell your Rivian stock, why are you coming to me for money? And again, while perhaps a smart strategic move, holding it as a hedge doesn't scream confidence in yourself. Investors will say, I'm investing in Ford, if I wanted Rivian I'd invest in Rivian. By holding the stake, Ford would be saying, we believe Rivian will deliver higher returns on capital than reinvesting that money in our business, not a good look (even if it were true).
That $35 Billion should address a number of needs before bailing out of a stock that (let's hope) is viewed as having great growth potential over time. The potential for strategic partnerships still exist, even if earlier plans have been scuttled. From a cynical, competitive, Sun Tzu standpoint, they may be thinking "Keep your friends close, your enemies [read 'competitors'] closer". Leaving the Board allows them some distance and safety while still keeping a foothold in the company. Ford has been around as long or longer than most all legacy OEMs, and will likely be around when all people alive today are gone. They've exhibited a history of making decisions that have put them in a position of continued leadership within the worldwide industry. With their deep pockets and long-term vision, I'd be surprised to see them cut and run very soon. Then again, they did foist the Edsel on the world. ?
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