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The Rivian IPO float set to generate some substantial numbers for the EV automaker, even as it readies production output.
On Tuesday, electric vehicle maker Rivian Automotive priced its IPO at $78 per share – valuing the company at $66.5 billion. However, if underwriters choose to exercise their full purchase option, Rivian will end up with a market cap of $68 billion instead. The car company’s stock will trade on Wednesday on the NASDAQ, using the ticker symbol RIVN.
The Rivian IPO is one of the largest US stock market debuts of the last ten years. In addition, it also underscores Wall Street’s belief that the electric-vehicle market is a fast-growing, veritable goldmine. Rivian said it had already sold 153 million shares in the offering, which is 135 million more than expected. Plus, the electric automaker also expects the IPO to realize $11.9 billion. This trumps Uber’s $8 billion IPO back in 2019. The Rivian effort is the largest, before any deductions, since Facebook’s in May 2012.
As of last week, Rivian’s projected share price range was between $57 to $62. The car company upped it to between $72 and $74 before eventually settling on $78. In addition, the Amazon (NASDAQ: AMZN) and Ford (NYSE: F) backed company’s present market capitalization is closing in on both Ford ($79 million) and General Motors ($85 billion). Ford alone sold over four million vehicles worldwide in 2020, while Rivian is yet to make any sales.
In Light of IPO, Rivian Has a Long Production and Distribution Road Ahead
Rivian has a pre-order of more than 50,000 for its R1T pick-up truck and R1S sport utility vehicle. In addition, the electric car-manufacturing company also has a 100,000-truck order from e-commerce giant Amazon for 2025. The latter owns 22% of Rivian after participating in several multibillion-dollar funding rounds and investing $1.3 billion in the car company.
Rivian announced in its prospectus that it expects to lose about $1.28 billion in the third quarter – as revenue ranges from zero to $1 million. The company is the latest electric vehicle producer to command enormous investor capital without a sustainable business model. This may be because investor bias is bullish as it views Rivian as a potential Tesla. As a Rivian IPO insider put it:
“The dream they’re selling is pretty extraordinary. If you think about Rivian’s predecessor in Tesla, and what has been accomplished in that stock, and how it has disrupted that industry and sustained that disruption, the dream around Rivian is pretty real too. It’s captivating.”
Meanwhile, Tesla Inc (NASDAQ: TSLA) surpassed a market capitalization of $1 trillion last month in October, notably after a lucrative deal with American car rental Hertz (NYSE: HTZ). However, this week, Tesla shares dropped after company CEO Elon Musk suggested selling off some of his stock. Tesla is currently the fifth most valuable company in the world.
Rivian’s primary challenge now is to scale up its production to meet the growing orders of its customer base. This is especially so as more people are beginning to shift from gasoline-powered vehicles to EVs within the next decade. During the early stages of its production phase, Tesla weathered several tough months as it struggled to roll out its sedan in large numbers.