Posted on 11/11/2021 9:45:01 AM PST by SeekAndFind
The euphoria around Rivian kicked into overdrive Wednesday as it debuted as a publicly traded company, with an opening share price of $106.75.
If that sticks, it would give Rivian an implied valuation of $90 billion. The opening trade was nearly 37% higher than its listed IPO price of $78. That absolute eye-popping number makes Rivian one of the largest IPOs in U.S. history and puts its market cap above GM as well as one of its backers, Ford (GM’s market cap is $86.31 billion; Ford’s is $78.2 billion).
That share price continued to rise after it began trading around 1 pm ET, hitting as high as $119 a share before falling to about $112.
The historic size of the Rivian IPO is not lost on founder and CEO RJ Scaringe. However, and perhaps as expected, he is bullish on the future of EVs, noting in a recent interview that the 90 to 100 million vehicles sold each year will transition to electric in the next 10 to 20 years.
“Ultimately, the way investors look at the space is really valuing what the future looks like,” Scaringe said. “In not too much time, 100% of the business will be electric.”
And while Rivian is very early in terms of its vehicles and launch, Scaringe said investors see and are valuing the company based on its future potential as well.
“If they’re evaluating us purely on our P&L (profit/loss) today, I think they’d be missing the point of the company; they’re, of course looking at what they think the company is capable of achieving over time,” he said.
What Rivian is capable of achieving has yet to be proven; investors, customers and industry observers will learn that soon enough. However, its future plans are certainly ambitious and extend far beyond the first two consumer vehicles — the R1T pickup truck and the R1S SUV — and its partnership with Amazon to produce 100,000 electric commercial delivery vans by 2024. Patent documents as well as Scaringe’s own comments to TechCrunch show that Rivian plans to launch a range of consumer and commercial products.
Investors may also be betting that Rivian’s push to become vertically integrated — in the long term it even plans to develop its own battery cell — will make the company a technology leader.
“It’s really critical to control and vertically integrate what we would think of as the core technology stack — so all the electronics in the vehicle, the full software stack, the propulsion layer in the vehicle,” Scaringe said. “I would say among all those things, the most important is actually software and electronics.”
The company planned to offer 135 million shares at a price between $57 and $62. Underwriters also had an option to buy up to 20.25 million additional shares.
To say that investor demand has been frenetic is perhaps the understatement of 2021. Rivian not only upped its targeted share price twice, finally listing its initial public offering at $78 a share, it also added more and offered 153 million shares of common stock, according to a regulatory filing was posted late Tuesday evening. Rivian also gave underwriters an option to buy another 22.95 million shares, a higher number than previously expected.
The size of the IPO also benefits some of its biggest backers. Amazon holds a 20% stake and Ford has a 12% stake in Rivian.
The run up in Rivian’s stock is notable for a number of reasons. For instance, it is now valued more than established automakers that produce and sell millions of vehicles every year.
In contrast, the revenues are light and the expenses are high over at Rivian.
The company has hired thousands of employees over several facilities, including its factory in Normal, Illinois. The company now employs more than 9,000 people, Scaringe told TechCrunch in an interview Tuesday evening.
Scaringe’s obsession with vertical integration has also pushed up R&D costs. (The company spent $766 million on R&D in 2020. In the first half of 2021, the company spent $683 million on R&D.)
As a result, net losses have expanded as it prepared for production of the R1T pickup truck and R1S SUV. The company posted a net loss of $994 million in the first half of 2021 alone, far more than double its $377 million net loss the company posted in the same period of 2020.
Meanwhile, revenues are trickling in as deliveries of its R1T to customers, which began last month, begin to ramp up.
Pump and dump
Is this another Kamala thread?................
Pretty good for a business which currently can only build prototypes.
Highly visible IPO’s like Rivian usually have a sizable pop when they debut. Give it a few weeks to settle down before buying.
Yep. Ridiculous hype.
I was listening to an interview with Warren Buffet. In essence he said, buy things that produce something. Buy things that make a profit. Buy things with little debt.
He didn’t like cyber currencies or gold because, you’re buying them hoping that someone later will pay you more for it. If you track gold back to the time of Jesus you will find it roughly kept up with inflation. Sometimes there’s a panic and people dive into gold as a “store of value.” But gold and cyber currencies don’t produce anything. If the value of your farm drops you still have the wheat it produced.
A new electric car company with a ridiculous evaluation is being bought on the theory that someone else will pay you more for the stock later, not based on the value of what the company produces.
When the bloom is off the rose all those tiny voices saying that the electric grid can’t support the number of electric cars that will supposedly be produced will be listened to. If they aren’t then economic reality will eventually kick in.
Saturn redux.
Ford owns 12% of Rivian invested in 2019. The sheet metal of the Rivian reminded me of Ford F-150.
... well, at least until the locusts come to pay you a visit.
“If the value of your farm drops you still have the wheat it produced.”
“I was listening to an interview with Warren Buffet. In essence he said, buy things that produce something. Buy things that make a profit. Buy things with little debt.”
Amazon never made a profit for years. Stock was selling as low as $2.00 share and had huge debt. Now it is $3600 share.
Warren Buffet ..I would do the complete opposite of whatever he says he does. He did not get where he is at by giving out information.
One of my clients is worth 500 millions. He told me he never gives advice or tells anyone how he did it, what he is going to do or what people should do. Now that is good advice.
EV companies are the new dot com bubble. A few will have tremendous returns. Most will crash and burn.
Yes
I worked for a telecom equipment manufacturer that briefly had a market cap larger than Exxon’s during the dot-com runup. Hard to find a trace of that company today.
Just like the dotcom boom, pick your stock and buckle your seat belt. And keep your hands and feet inside the ride.
I’m thinking of starting a company which will bring the people to the moon and back by 2030, with Mars the target by 2015, and interstellar travel by 2040, and it will build rockets and moon stations for vacationing on the moon and planets.
The IPO should be on the market in a few months. Any takers?
I promise that it will be the greatest thing ever. Oh, dnd it will be powered by electricity and solar panels and windmills and hydro-power. No fossil-fuels involved!
(Do hype and IPO rhyme?).
You can’t lose when you bet on the stupidity of large numbers of people especially went back by the ignorance of government.
An you see you excited I am? Should we all sell our Kevmo stock now?
Smells like Solyndra to me. Especially if King Bidet decided to pump Fed money into it.
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