Rivian IPO Leads to Bonanza for Ford

Ford confirms it made $8.2 billion during 2021 on its stake in electric-vehicle startup Rivian, according to a filing with the U.S. Securities & Exchange Commission. 

The announcement by Ford follows the successful public offering of stock by Rivian back in November, which made the fledgling BEV maker’s founder and CEO R. J. Scaringe a billionaire.

Ford, after initially investing roughly $200 million in Rivian in 2019, is shelving plans to build a Lincoln SUV using Rivian technology but still owns more than 13% of the BEV maker's stock. 

The Rivian stake has helped boost the value of Ford’s own shares and lift its market capitalization, or the company’s value on the stock market, to about $100 billion, depending on the market’s daily fluctuations. It could be instrumental in financing both Ford’s expansion of its own line of BEVs and construction of a BEV assembly plant and battery plants in Kentucky and Tennessee (pictured, below)

In its filing with the SEC, Ford says it will file its financial reports for the fourth quarter and for full-year 2021 on Feb. 3. But the automaker adds it will report a fourth-quarter gain of $8.2 billion on its equity investment in Rivian, following the BEV maker’s initial public offering of common stock and a mark-to-market revaluation of the holding and classify it as a “special item.” 

In addition, Ford will reclassify the $900 million first-quarter 2021 non-cash gain from the Rivian investment as a special item – a step the automaker noted in October it would take after Rivian’s IPO, Ford says in its SEC filing. The reclassification means the gain from first-quarter 2021 will not be included in Ford’s full-year adjusted EBIT, or adjusted earnings per share.   

When Ford last provided full-year adjusted earnings before interest and taxes guidance with its third-quarter results on Oct. 27, the $900 million gain was included in the forecast range of $10.5 billion to $11.5 billion, which means the gain on Rivian accounted for a significant portion of Ford’s EBIT. 

Instead, the accounting changes mean Ford plans to report the gain as part of its fourth-quarter and full-year earnings as special items included in the automaker’s reported GAAP net income and earnings per share (EPS), but excluded from its non-GAAP adjusted earnings before interest and taxes and adjusted EPS.  

In the future, Ford’s mark-to-market revaluations to account for changes in Rivian’s stock price could result in related gains or losses each quarter reported as special items, the company says in its SEC filing. 

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