Rivian Automotive Inc.’s initial public offering (IPO) made history when it went live on November 9, 2021, at $78 per share. Rivian’s debut on the U.S. stock market offered 153 million shares at $78 per share, a figure higher than initially expected.
Rivian’s stock price has since then climbed to $100.73 per share by the time the markets closed the next day; At the time of writing, the price has increased to about $129 per share.
Rivian’s IPO is the largest globally this year, and the estimated $11.9 billion raised makes it the largest IPO for an American company since Facebook. Rivian’s underwriters for its initial public offering are Morgan Stanley, Goldman Sachs, and J.P. Morgan.
Rivian is trying to enter the public markets in a big way, according to filings with the Securities and Exchange Commission (SEC), and it’s setting its sights high.
A few days before the IPO went public, Rivian revealed that it intended for its IPO to reach a valuation of more than $65 billion, aiming to price shares between $72 and $74. In this regard, Rivian’s market cap would be slightly lower than veterans and industry-first companies like General Motors ($84.82 billion) and Ford Motor Company ($79.65 billion), the latter being a major shareholder in the electric adventure truck manufacturer. Rivian’s price objective is based on the belief that the EV automaker will witness a parabolic growth in the coming years, similar to Tesla, which has a market cap of over $1 trillion.
If Rivian’s shares ended up selling even beyond the top of their marketed range, and the company made history as the seventh-biggest US IPO on record, according to Bloomberg. It also overtook longtime players in the auto segment, such as Japanese carmakers Honda Motor Co., which has a market cap of $53 billion, and French automaker Renault SA, which is valued at a conservative $11 billion.
Rivian’s S-1 filing with the Securities and Exchange Commission provided some insight into the company’s finances thus far. Rivian is now bleeding cash, as expected, and similar to other electric car startups. The company has made significant expenditures in research and development and has substantial operating costs. This is most likely because the automaker is still learning and tweaking its mass-producing lines for its three vehicle choices.
Rivian now employs approximately 8,000 people across its facilities from Arizona, California, Michigan, Illinois, Vancouver, Canada, and the United Kingdom. The company’s losses grew as it approached the manufacture of the R1T pickup truck and R1S SUV. Rivian’s net loss from January to June 2021 was $994 million, more than double the $377 million loss it had in the first half of 2020. Rivian’s R&D costs are also rising, with the business investing $683 million in the first and second quarters of 2021. In comparison, the expense of R&D for 2020 was $766 million. Rivian still has around $3.6 billion in cash on its balance sheet despite this. Rivian now employs approximately 8,000 individuals across Arizona, California, Michigan, Illinois, Vancouver, Canada, and the United Kingdom.
The company’s losses grew as it approached the manufacture of the R1T pickup truck and R1S SUV. Rivian posted a net loss of $994 million from January to June 2021, more than double the $377 million net loss it posted for the first half of 2020. Rivian’s R&D expenses are also on the rise, with the company spending $683 million in Q1 and Q2 2021. In comparison, its Research and development cost for 2020 stood at $766 million. Despite this, Rivian still has about $3.6 billion in cash on its balance sheet.
Rivian stands out among today’s EV companies because it already has a confirmed customer in Amazon, which has placed an order for 100,000 all-electric delivery vans. However, Rivian may face a “natural ceiling” of 300,000 to 400,000 units per year, according to New Street Research analyst Pierre Ferragu, mainly due to the price range of two consumer vehicles, the R1T pickup truck and the R1S SUV. The base model of the R1T starts at $67,500, while the R1S starts at $70,000.
“Above $70,000, the global addressable market for Rivian’s SUV and pickup is less than 1.5 million units, and it will be a crowded space,” Ferragu wrote.
Rivian may face an uphill battle building up its initial vehicles, according to Ivan Drury, a senior analyst at Edmunds, particularly given the ongoing chip crisis.
It’s difficult enough for established automakers, let alone a new one. Couple that with this new issue the entire industry is dealing with, the chip crisis, that just adds another layer of complexity,” Drury noted.
Rivian is currently turning its focus on delivering the first batch of its Amazon delivery vans, esteeming deliveries for the vans more than deliveries of the truck, as we reported earlier. Rivian’s new refresh of its website shows that it is opening up its delivery van platform to any other delivery service that wants to go electric with its delivery fleet.
Rivian expanded its fleet business that looks to be solely tied to Amazon, revealing from the new section of Rivian’s website that it will start taking orders for its electric delivery vans in 2022 and plans to deliver to fleet customers in 2023.
It also announced that it would sell fleet versions of its R1T electric pickup truck and R1S electric SUV, which widens the customer base beyond the consumer adventurer that Rivian has been focusing on. This giant move puts Rivian in competition with Ford’s commercial version of the F-150 Lightning, as well as FleetOS, a fleet management platform, and a charging infrastructure solution.
Customers will be able to utilize Rivian’s online fleet configurator to plan and make fleet orders beginning early next year, according to the new component of the site, which debuted on Friday and was tweeted out by some Rivian employees. The first deliveries would not take place until the following year.
Given the volume of orders it has received from the e-commerce behemoth, this plan makes reasonable, but it might also result in the R1T and R1S being ramped at a slower pace. Rivian claims to have received slightly over 55,000 pre-orders for the R1T and R1S so far. Since the R1 introduction. Actual trucks the company has shipped amounts to 156 units of the all-electric pickup truck, with “almost all” of them going to Rivian personnel.
According to the SEC filing, Rivian expects to fill its pre-order backlog of approximately 55,400 R1 vehicles by the end of 2023. Previous reports also note that Rivian is expected to deliver the first 10,000 units of its Amazon delivery vans by the end of 2022, with the entire 100,000-unit order being completed by the end of the decade.
Similar to other automakers, Rivian is also involved in some legal challenges. Among the more notable ones involve fellow EV maker Tesla, which has filed a suit against Rivian last year over the alleged theft of intellectual property related to recruitment, bonus and compensation plans for sales personnel, and manufacturing project management systems. A later lawsuit from Tesla also alleged that the truck maker was acquiring core technology related to its upcoming 4680 cells, which was deemed by the Silicon Valley-based company as the “most essential element for any electric vehicle.”
More recently, Laura Schwab, who was the first female President in luxury automaker Aston Martin’s history, also filed a suit against Rivian over alleged gender discrimination. Schwab served as Rivian’s Vice President of Sales and Marketing during her tenure with the company. But according to the former Rivian executive, she was routinely excluded from meetings despite her experience in the auto industry, and her warnings about the R1T and R1S’ pricing and public targets were largely ignored. Finally, Schwab noted that she was terminated by Rivian just before it went public, which effectively made her lose “millions of dollars in unvested equity on the eve of the company’s IPO.”
Following Tesla’s entry into the trillion-dollar club, many investors are seeking the “next Tesla.” While not all-electric vehicle startups have succeeded — Nikola, a hydrogen truck firm, is an excellent cautionary story — Rivian and Lucid Motors appear to have the makings of a viable, possibly profitable long-term business. Asad Hussain, a senior mobility analyst at Pitchbook, put it this way: “Rivian’s premium market valuation reflects its ownership of the whole value chain and ability to develop without having to deal with stranded assets.” The market now has credible prospects for “the next Tesla” in Rivian and Lucid. Would you consider investing in Rivian? Sound off in the comments below.