Rivian IPO: Valuation Surpasses GM and Ford - 2021's Biggest IPO

Rivian's Public Debut and Valuation

Wednesday marked a significant milestone for Rivian, as the company began trading publicly. The initial share price opened at $106.75, generating considerable excitement.

This opening price suggests an implied valuation of $90 billion for Rivian. The initial trade represented an increase of almost 37% compared to the IPO price of $78.

The stock price experienced further gains after trading commenced around 1 pm ET, peaking at $119 per share before settling around $112.

Scaringe's Vision for the Future of EVs

The substantial size of Rivian’s IPO has not been overlooked by its founder and CEO, RJ Scaringe. He expressed a strong belief in the future of electric vehicles (EVs).

Scaringe noted that within the next 10 to 20 years, the approximately 90 to 100 million vehicles sold annually will likely transition to electric power.

“Investors are essentially valuing the potential of the future,” Scaringe explained. “A complete shift to electric vehicles is anticipated in the foreseeable future.”

He emphasized that investors are recognizing and valuing Rivian’s future potential, even at this early stage of vehicle production and launch.

Beyond Current Profitability

Scaringe stated that evaluating Rivian solely on its current profit and loss statement would miss the core essence of the company. Investors are focused on the company’s long-term capabilities.

“They are looking at what the company is projected to achieve over time,” he added.

Ambitious Future Plans

While Rivian’s capabilities are still being demonstrated, its future plans are extensive. These plans extend beyond the initial R1T pickup truck and R1S SUV.

The company also has a partnership with Amazon to produce 100,000 electric commercial delivery vans by the year 2024.

Rivian intends to launch a diverse range of both consumer and commercial products, as indicated by patent filings and statements made by Scaringe to TechCrunch.

Vertical Integration and Technology Leadership

Investors are potentially anticipating that Rivian’s commitment to vertical integration – including plans to eventually develop its own battery cells – will establish the company as a leader in technology.

“Controlling and integrating the core technology stack is crucial,” Scaringe said. “This includes all vehicle electronics, the complete software stack, and the vehicle’s propulsion system.”

He further highlighted that software and electronics are the most critical components of this strategy.

Ultimately, Rivian’s success will depend on proving its capabilities, but its ambitious vision and strategic approach have already captured significant investor attention.

Rivian's Volatile IPO Journey

The initial public offering of Rivian has been remarkably dynamic since the company’s filing became public last month, following a confidential submission in August. This filing provided a comprehensive overview of Rivian’s financial position, potential risks, and growth prospects.

It revealed a company actively investing capital in the challenging process of designing, developing, manufacturing, and ultimately selling electric vehicles.

Initial Offering Plans

Rivian initially intended to offer 135 million shares, with a price range set between $57 and $62 per share. Underwriters were also granted an option to purchase up to 20.25 million additional shares.

Surging Investor Demand

The level of investor interest proved exceptionally strong, arguably an understatement of the year 2021. Rivian subsequently increased its target share price twice.

The company ultimately launched its IPO at $78 per share and expanded the offering to 153 million shares of common stock, as detailed in a late Tuesday regulatory filing. Underwriters also received an option to acquire an additional 22.95 million shares, exceeding the previously anticipated amount.

Benefits for Major Stakeholders

The substantial size of the IPO also positively impacts Rivian’s key investors. Amazon currently holds a 20% stake in the company, while Ford maintains a 12% ownership position.

Valuation and Financial Performance

Rivian’s stock price surge is particularly noteworthy. The company’s valuation now surpasses that of well-established automotive manufacturers who produce and sell millions of vehicles annually.

Conversely, Rivian’s revenues remain modest, and its operating expenses are considerable.

Expansion and Workforce

The company has significantly expanded its workforce across multiple facilities, including its manufacturing plant in Normal, Illinois. Rivian now employs over 9,000 individuals, as stated by Scaringe in a recent TechCrunch interview.

Investment in Research and Development

Scaringe’s commitment to vertical integration has contributed to increased research and development costs. Rivian invested $766 million in R&D during 2020.

Furthermore, the company allocated $683 million to R&D in the first half of 2021 alone.

Net Losses and Revenue Growth

Consequently, net losses have widened as the company prepared for the production of the R1T pickup truck and R1S SUV. Rivian reported a net loss of $994 million in the first half of 2021.

This figure is more than double the $377 million net loss recorded during the same period in 2020.

However, revenues are beginning to materialize with the commencement of R1T deliveries to customers last month, and production is expected to increase.