It’s been a difficult week for Ford (NYSE:F), and things aren’t looking up today. The auto giant recently reported high losses for 2022 to the tune of $2 billion. But recently, the company announced that it sold its entire stake in Rivian (NASDAQ:RIVN) after the electric vehicle (EV) startup dragged it down throughout last year. While Ford is moving forward without Rivian, fellow backer Amazon (NASDAQ:AMZN) maintains its stake in the electric truck maker. This may sound like good news for Ford at Rivian’s expense. But today, RIVN stock is outperforming Ford, though both companies are in the red.
Let’s take a closer look at the two automakers and see what investors can expect as markets adjust to a new year.
RIVN Stock: On the Road Without Ford
Rivian turned many heads with its record-setting initial public offering (IPO) in November 2021. Throughout 2022, it garnered plenty of negative coverage as the bear market pushed stocks down across the board. However, RIVN stock is still up more than 15% year-to-date (YTD) and has been climbing steadily since 2023 began, demonstrating gains that have outpaced Ford’s.
It’s true that Rivian recently implemented layoffs, reducing its workforce by 6%. But just two weeks ago, Ford did the same thing, laying off more than 3,000 workers across Europe. Both companies struggled in 2022, as most stocks did amid a turbulent bear market. But even in the face of Ford cashing out of Rivian, the latter is outperforming the former. As of this writing, Ford is down more than 10% for the day while RIVN stock has only fallen by 3%.
Clearly, the market hasn’t given up on Rivian, even if Ford has. And there’s no reason that it should. Ford cashing out doesn’t mean that Rivian is done. It simply means that the larger automaker needs to make adjustments to its balance sheet following a very difficult year. Rivian’s other partner, Amazon, remains the company’s top shareholder with a stake that did not change in Q4. Now that markets are gradually shifting in a positive direction, Amazon is even less likely to cash out.
InvestorPlace Senior Investment Analyst Luke Lango sees RIVN stock as a 2023 winner. He recently described it as the “Tesla (NASDAQ:TSLA) killer positioned to soar in 2023,” citing its strong growth potential in a booming market. While Lango’s bullish thesis mentions Rivian’s partnership with Amazon, it doesn’t touch on Ford. But it does touch on strong financials. As he states:
“Rivian plans to use basically every penny of that cash balance over the next two to three years to develop market-leading tech, secure market-leading supply deals, and establish market-leading production capacity. Rivian’s $20 billion should enable it to create an electric vehicle empire by 2025.”
What Comes Next
It is important for investors to take a macro perspective when it comes to RIVN stock. All the negative press it has attracted lately shouldn’t pull focus from the bigger picture: that Rivian has plenty going for it. Markets are still recovering from a difficult year, but as they do, RIVN stock will continue recovering and procuring its market share. The company faces less competition among EV producers, as it builds trucks, not smaller sedans. And it remains a favorite among powerful investors such as Amazon and George Soros, who want to see it succeed.
As Lango notes, Rivian has the tech to compete with larger automakers. Ford cashing out won’t hold it back.
On the date of publication, Samuel O’Brient did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.