Amazon Needs to Dump Rivian Shares

By Douglas A. McIntyre Published Mar 13, 12:30PM EDT

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Amazon Needs to Dump Rivian Shares — © Toa55 / iStock via Getty Images

The news hit the wire Monday that Rivian Inc. (NASDAQ: RIVN | RIVN Price Prediction) wants to end a relationship that forces it to sell all its trucks exclusively to Amazon.com Inc. (NASDAQ: AMZN). Amazon owns 17% of Rivian as part of a larger strategic relationship. Amazon should use the new conversations to dump all its Rivan shares. Rivan has very little chance of being a winner in the electric truck industry and may not even survive. (Click here for 17 terrible investments by Amazon.)
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A new deal with Rivian would open a window to sell trucks to other commercial customers. That assumes that there are any who would risk buying inventory from an electric vehicle company with substantial financial difficulties.
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Amazon’s 17% of Rivian is worth $2 billion, if the ownership is unrestricted common stock. Rivian trades at $14 a share and is dropping, against a 52-high of $56.76. Amazon could have done much better, but at least it does not face a loss on its investment. Amazon would need to act quickly, however. The news made Rivian’s stock sell off another 6%.
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Why is a deal once so important to both companies in trouble now? Few know, but for Amazon’s part, it is a fortunate break.

Rivian has gone through two rounds of layoffs as it has bled cash. It recently announced a $1.3 billion “green bond,” which appears to be nothing more than a way to raise needed cash.
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Rivian has been dogged by bad news. It produced little more than 10,000 vehicles in the fourth quarter. Last year, Rivian lost $6.8 billion on revenue of $1.7 billion. It had $11.6 billion in cash at the end of the year, which many think is too little to get the company to break even.

The Amazon deal with Rivian was done in what, in the information age, was eons ago. Things have changed radically for both companies. It is time for Amazon to get out, including with its investment.

About the Author Douglas A. McIntyre →

Douglas A. McIntyre is the co-founder, chief executive officer and editor in chief of 24/7 Wall St. and 24/7 Tempo. He has held these jobs since 2006.

McIntyre has written thousands of articles for 24/7 Wall St. He is an expert on corporate finance, the automotive industry, media companies and international finance. He has edited articles on national demographics, sports, personal income and travel.

His work has been quoted or mentioned in The New York Times, The Wall Street Journal, Los Angeles Times, The Washington Post, NBC News, Time, The New Yorker, HuffPost USA Today, Business Insider, Yahoo, AOL, MarketWatch, The Atlantic, Bloomberg, New York Post, Chicago Tribune, Forbes, The Guardian and many other major publications. McIntyre has been a guest on CNBC, the BBC and television and radio stations across the country.

A magna cum laude graduate of Harvard College, McIntyre also was president of The Harvard Advocate. Founded in 1866, the Advocate is the oldest college publication in the United States.

TheStreet.com, Comps.com and Edgar Online are some of the public companies for which McIntyre served on the board of directors. He was a Vicinity Corporation board member when the company was sold to Microsoft in 2002. He served on the audit committees of some of these companies.

McIntyre has been the CEO of FutureSource, a provider of trading terminals and news to commodities and futures traders. He was president of Switchboard, the online phone directory company. He served as chairman and CEO of On2 Technologies, the video compression company that provided video compression software for Adobe’s Flash. Google bought On2 in 2009.