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George Soros Deals a Big Blow to Tesla Rival Rivian

The legendary investor is a major shareholder in the young electric vehicle manufacturer.
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It's been a somewhat hectic August for Rivian  (RIVN)

The startup, which is presented as one of Tesla's  (TSLA)  most serious rivals in the race for electric vehicles, is currently accumulating setbacks. 

The electric vehicle manufacturer has just announced mixed earnings for the second quarter. While the company kept its forecast to produce 25,000 vehicles in 2022 unchanged, it lowered its main profit target due to continued supply chain woes.

"Supply chain continues to be the limiting factor of our production" the company said on Aug. 11 in a letter to shareholders. "Throughout the quarter, our cost of materials was impacted by inflationary pressures, which we believe will continue to be an impact for the near future."

Big Challenge Ahead

Chief Financial Officer Claire McDonough detailed these inflationary pressures later to analysts.

"We've seen unprecedented levels of inflation especially across our raw material, inputs and lithium prices that have gone up north of 115% over since the start of this year, in particular coupled with Covid and other factors that have driven a challenging supply chain and inflationary environment as well as part of that."

But the company said it was making "progress" with its suppliers: "We expect to be able to add a second shift for vehicle assembly towards the end of the third quarter."

As of June 30, Rivian had only manufactured 6,954 cars. In other words, it must manufacture at least 18,046 vehicles during the second half of the year to meet its goals.

The automaker also said it expected to lose a little more money than initially expected this year. Its annual adjusted loss before interest, taxes, depreciation and amortization should come at around $5.45 billion. The company had previously said that it was expecting a full-year EBITDA of negative $4.75 billion.

Soros Sold Millions of Rivian Shares

Besides this bad news, Rivian has just received an additional blow and this one comes from the iconic investor George Soros. Indeed, in a regulatory document filed with the Securities and Exchange Commission on Aug. 12, the billionaire's firm Soros Fund Management indicated that it sold millions of Rivian shares during the second quarter.

Soros Fund Management owns just over 17.835 million Rivian shares - 17,835,511 Rivian shares to be precise - for a value of $459 million as of June 30. This is quite the opposite of the first quarter, a period during which Soros acquired additional Rivian shares while Ford  (F) , one of the group's other major shareholders with Amazon  (AMZN) , also sold millions of shares. 

As of March 31, Soros Fund Management held just over 25.88 million Rivian shares. 

Rivian shares continued to fall in the second quarter, losing 49% of their value between April 1 and June 30. Since the beginning of the year, Rivian stock is down 62.5%.

The Irvine, Calif.-based company has a busy roadmap in the next 18 months: ramping and enhancing the R1T pickup/truck and R1S SUV, as well as its electric delivery van, the EDV.

The blow is all the harder for Rivian as Soros invested for the first time in Tesla and Ford. The billionaire has also strengthened his position in Lucid  (LCID)  and Nio  (NIO) , two other competitors of Rivian who are also in the process of increasing production rates.

It's hard to say whether the legendary investor's decision suggests he's beginning to doubt Rivian or whether he simply wants to diversify his investments in the electric vehicle sector by betting on different players.

Stock market regulations require managers of funds with more than $100 million in U.S. equities to file a document, known as a 13F, within 45 days of the end of the quarter to list their holdings in stocks that trade on U.S. exchanges.

The value of Soros' U.S. equity portfolio rose 5.3% quarter over quarter to $5.6 billion. Soros Fund Management is a family office that manages public and private equity. 

Soros, whose net worth is estimated at $8.5 billion as of Aug. 12 according to Bloomberg Billionaires Index, is well known for pouring money into philanthropic efforts. Most of his firm's assets belong to Open Society Foundations, which supports "people across the world who work for justice, equity and free expression."