In 2020, despite a global plague making it harder for people that wanted to grab a beer at the end of a long workday, Anheuser-Busch the producer of Budweiser and a whole spectrum of other alcohols brought home profits of a cold $46bn. Recorded in New York, its market capacity stands at a cool $101bn. A few positions above it on the market capacity scorecard lies Rivian a company whose total income in the year to end of September 2020 was precisely zero.
It produces electric pick-up trucks, which are not yet on the road, and a current plan to create an electric car alongside Ford has just been terminated. What it has is 48,000 pre-orders from buyers and orders from Amazon for 100,000 electric vans.
Its market capitalization on the equal NASDAQ exchange is currently at $105bn, earning it perhaps unsurprisingly and making it a valued company without any earnings history.
If the success of firms like Uber and Deliveroo has proven the growing gap between profitability and stock market achievement, Rivian’s push to the upper positions of the US stock market left many surprised.
Daniel Clarke at data and analytics firm GlobalData informed City A.M. that “it is significant to point out that the concept of value in the stock market has changed relatively in recent years and is incredibly contested.”
“More traditional investors loathe Tesla and Rivian’s jaw-dropping market capacity because of the big gaps between their current proceeds and their valuations.” But even by the principles of today’s stock market, Clarke said Rivian’s price stays eye-catching. and it took Tesla over 2,400 days to reach a $100bn valuation, whereas Rivian achieved this in just three days.
Others are more straightforward. The valuation is unusual and at some point, the market will realize that, reckons CMC Markets’ Micheal Hewson.
Rivian’s float and the market’s inconsistent reaction to it were not completely accidental, as the company has some significant supporters on its side, including Amazon and Ford. Amazon has a 20 percent stake in the company, while the US carmaker owns 12% of the Californian manufacturer.
Jim Saker, professor of retail management and director of the Centre for Automotive Management at Loughborough University made a point by saying that Rivian’s prominent investors participated in large part in its IPO.
The company is also profiting from the US Government demonstrating tremendous consent towards green cars. Early this month, President Biden endorsed into law a $1.2tn infrastructure package, which contains $7.5bn that will be distributed to establishing an additional 400,000 EV charging stations.“The Biden administration’s venture is not hyperbolic and will have an important impact on US electric vehicle charging supply,” Mark Boyadjis, IHS Markit’s global automotive technology lead, told Forbes. Not everyone is persuaded, though. Elon Musk took a jab at the recent opponent, tweeting on 11 November that “there have been hundreds of automotive start-ups, both electric and combustion, but Tesla is the only American carmaker to reach high volume production and positive cash flow in the past 100 years.”
