Quite unexpectedly, 2024 has not been a good year for electric vehicle makers thus far — at least for most of them. An unfavorable macro environment and stubborn supply chain issues, coupled with slowing demand have come together to form a market where just a couple of carmakers can win — while others are resigned to seemingly endless struggles.
Rivian Automotive (NASDAQ: RIVN) stock has suffered quite a bit in this context — at press time, one RIVN share was worth $12.22 — a 42.09% decrease on a year-to-date (YTD) basis. Although the company has recovered somewhat from its $8.40 yearly low, industry-wide issues, the election of Donald Trump, and bleak revenue projections are keeping it in the red.
Over the last five trading days, Rivian stock has seen a 20.16% surge to the upside, driven by three positive catalysts — the settlement of a longstanding lawsuit with Tesla (NASDAQ: TSLA), the possibility that California will provide battery electric vehicle businesses with rebates, and a conditional $6.6 billion loan from the Department of Energy (DOE).
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That is certainly encouraging news — but on November 25, the company’s CEO, Robert Scaringe, sold approximately $973,000 in RIVN shares, as revealed by an SEC Form 4 filing made public on November 27.
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Scaringe sells Rivian stock amidst surge
The CEO’s transaction encompassed 83,334 Rivian shares, sold at an average price of $11.25 per unit — worth a total of approximately $937,507. In tandem with this, Scaringe also exercised stock options, which allowed him to purchase the same amount of shares at a price of $2.6282 per unit — or $219,018 on the whole.
All in all, Scaringe made a tidy $718,489 profit on the trades.
There are two interesting details to note here. Firstly, the expiration date on those stock options was March 15, 2029 — potentially signaling that leadership is skeptical regarding the company’s long-term prospects. Secondly, the trades were made in accordance with a 10b5-1 plan adopted back on March 8, 2024 — in other words, the trades were prescheduled. This plan allows Scaringe to sell up to 4,000,000 Rivian shares by June 9, 2025.
However, that second fact isn’t quite enough to quiet bearish speculation — a 10b5-1 plan can include ‘trigger prices’ — allowing insiders to execute sales once favorable conditions are met. Scaringe still holds 863,361 Rivian shares directly, as well as 2,632,766 in a trust.
The exact mechanics of the trade are less important— what is important is that the CEO exercised stock options with an expiry date years from now in order to sell at the current price point — which is not exactly a promising sign.
Rarely, if ever, does a single piece of information conclusively prove that a stock is a good or bad investment — but readers should keep in mind that this is a struggling business — and one whose leadership decided that taking profits now was a better choice than rolling the dice on what Rivian stock price will be in 2029.
Featured image via Shutterstock
