Rivian Goes Public In One of the Biggest IPOs Ever

Electric vehicle startup Rivian is now a publicly traded company after executing one of the biggest initial public offerings in history. The Verge reports: Rivian shares started trading on the Nasdaq stock exchange Wednesday at around $78 per share. That gave Rivian an overall valuation of nearly $80 billion and helped it net $12 billion in fresh cash, despite the fact that it only just recently started to make and ship its first electric pickup trucks. It's the sixth-largest IPO ever on a US stock exchange, according to Bloomberg, and it's hard to imagine the company picking a better time to debut. Tesla has generated an incredible amount of interest in electric vehicles and is now one of the most highly valued companies in the world. The public markets have also been on an outrageous run over the last few years -- a run that was supercharged over the last 18 months by an influx of retail traders and a boom in electric vehicle companies going public.

Rivian, which has a steady CEO and founder and relatively modest goals for the next few years, could be a good test of all that hype. It has received a little more than 55,000 preorders for its pricey electric pickup truck (the R1T) and SUV (the R1S) and has said it won't be able to deliver all of those until the end of 2023. Where other EV startups went public with big promises of near-term growth, Rivian has been very conservative in the few estimates it's offered for what the next few years look like and has instead emphasized that it will be largely focused on making vans for Amazon, which owns about 20 percent of the startup. And yet, shares of Rivian jumped to $106 as they began trading on the Nasdaq exchange Wednesday and climbed from there, lifting the company's valuation well over $100 billion -- higher than all other automakers on the planet, save for Tesla, Toyota, Volkswagen, and China's BYD.

Bailout heaven

[fustakrakich]

Federal Reserve is working its magic

For those who think Tesla is over-valued

[istartedi]

This company is closing in on $100 billion market cap after that IPO pop. Some think Tesla is over-valued at approx. $1.2 trillion because that's commensurate with all the other major car manufacturers *combined*. Tesla is only delivering a fraction of total vehicles to market. Let's see if we can get this bad-boy up to 10% of $TSLA market cap when it's only been delivering vehicles for about a month.

Bend over and kiss your over-valued crown good-bye, Elon. There's a new bubble baby in town.

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[Fly Swatter]

I guess you missed the Tesla sell off, its only 1.0 trillion now...

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[timeOday]

Another big difference is this is IPO money, which means it goes to the company to build trucks. (The company doesn't get anything when shares are re-sold after that, so only a very small fraction of the value of Tesla's outstanding shares ever went into the company).

$100B is a lot of money for where Rivian is at. But on the other hand, this is our system sending capital to where it is needed - to remake transportation, which is a capital-intensive and necessary enterprise.

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[ghoul]

Tesla has done multiple raises so it has actually raised more in secondaries than the original IPO. It also is able to pay its employees less than market by adding on some stock. So a high stock price does help the company.

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[Darren Hiebert]

Tesla has never had $100B in cash, nor are they likely to for a very long time. And I don't believe that any other startup has ever had such a staggering amount of cash—even Lucent's IPO brought in just $3B. What I expect is that this will result in a very wasteful corporate culture, much like the dot-com bubble in 2000 where many, many startups went bankrupt after squandering much of their cash on luxurious office furnishings [nymag.com]. Being tight on cash leads to efficient use; being awash in cash leads to w

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[Darinbob]

Everything big is essentially overvalued. Because number of stock shares times stock price is not a number that can ever hold up. It's impossible to sell a huge number of stocks without affecting the price, usually negatively.

This is similar to the guy in the desert willing to pay a thousand dollars for just one bottle of water. If someone drives up with a semi-truck full of bottled water, the parched person is not going to buy every bottle of water in that truck for $1000 each.

So people are overspending

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[140Mandak262Jamuna]

It is way worse than your analogy.

There is no desperate dying man willing sign over half his kingdom for a bottle of water.

It is some one with a truck load of bottled water. Some one paying 1000$ for a bottle deliberately and publicly saying some bullshit saying why he paid 1000$. A bunch of analysts and industry watchers declaring the fair marker valuation is 1000 $ per bottle.

Till some child openly says, "The Emperor ain't got no clothes" this charade continues.

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[AmiMoJo]

A lot of Tesla's over-valuing is due to Musk's BS, and eventually it's going to catch up with him.

"Full self driving" autopilot is 4 years late now and still nowhere near being able to meet the claims he made back in 2016. His "AI robot" was literally just a guy in a spandex bodysuit. Tesla's supposedly miracle battery tech has proven to be expensive and probably the wrong technology (cylindrical cells rather than pouch cells), and much of the tech is owned by Panasonic anyway.

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[LostMyAccount]

Does Tesla hold a lock on the near term production of Panasonic battery tech?

I guess I'm thinking of Apple's strategy of investing in the production of some new smartphone technology in exchange for exclusive rights to its production for some period. They don't own it per se, but they effectively can keep it out of the hands of competition for some period.

Regardless, it's hard to see how Tesla manages to respond to major automaker competition in electric vehicles. One of them will manage to out-Tesla them

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[AmiMoJo]

They don't seem to, Panasonic makes batteries for other manufacturers too.

Bjorn Nyland has been testing some Chinese made Model 3s recently. Their batteries seem to be even better than the US/European built ones. They have Chinese CATL batteries in them.

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[ceoyoyo]

Since they're roommates in the gigafactories, it would be a bit awkward if they didn't have some kind of long term agreement.

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[Type44Q]

Yet another dimwit who thinks building a car is an exercise for an accountant. Besides, TSLA - as overvalued as it may be - is the closest thing we've got to a blue chip stock anymore.

And to power them?

[timeOday]

Here is a quick survey of items in the just-passed infrastructure bill (bipartisan) that will help provide cleaner energy for electric vehicles:

• $7.5 billion to create a nationwide network of 500,000 electric vehicle charging stations. The Energy Department lists about 51,000 charging stations in use now.
• $65 billion for upgraded energy transmission systems.
• $62 billion that will be distributed to states, cities, tribes and others by the U.S. Department of Energy including:
  • money to help train American workers for those jobs in new energy technologies.
  • $21.5 billion in funding for clean energy demonstrations and research hubs focused on carbon capture and clean hydrogen.
  • $11 billion in grants for states, tribes, and utilities to boost the resilience of electric infrastructure against extreme weather and cyber attacks.
  • $7 billion to improve the supply chain for batteries, including sourcing and recycling critical minerals.
  • $750 million for a new grant program to support energy technology manufacturing projects in coal communities.
  • $550 million in the Energy Efficiency and Conservation Block Grant Program and $500 million in the State Energy Program to provide grants to cities and states to develop and implement clean energy programs and projects.

This is not the whole $1T package, just things that struck me as relevant to electric vehicles from here:

https://ncpolicywatch.com/2021... [ncpolicywatch.com]

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[jpapon]

I can't believe they only put 7.5 billion for charging stations. It's going to cost a hell of a lot more than that to build 500,000 stations - that's only 15k per station. Charging stations is the main thing holding EVs back at this point, and if the current EV demand is any indication, charging on road trips is going to be a goddamn nightmare for the next decade.

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[Gavagai80]

Charging stations aren't anywhere near as complex as gas stations. All the ones I've noticed are just a row of chargers added to preexisting parking spaces.

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[minorproblem]

You need to upgrade the local power supplies to accommodate those chargers which requires new cabling to the site, plus new transformers. The expensive part is the equipment, cabling and civil works.

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[WillAffleckUW]

A lot of existing gas stations are closing down in the West, due to our switch to cheaper and more reliable electric and hybrid vehicles. Most are being replaced by tall residential towers, but the ones that survive will still let you get a fast charge and grab a bite while you take your trip on the freeway.

We're already adapting. BC and California are already above 10% zero emission vehicles, and WA OR ID NV are close behind.

It's 2021, sunshine.

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[timeOday]

I am actually not sure what the public funding will cover - i.e. does it pay for charging stations entirely, or is it an incentive that covers part of the cost, like we see with EV incentives. (i.e. they don't buy you a whole Tesla but they give you a $7500 tax credit). I wouldn't really expect the government to foot the whole bill, just as it would not buy somebody a gas station.

re: charging for road trips

[King_TJ]

The thing is, Tesla has done a pretty good job of building out its supercharging network in proportion to the number of vehicles it produces. One reason you pay as much as you do for a new Tesla is because part of that helps fund that supercharger build-out.

Last I checked, Tesla had a new Supercharger site going online pretty much once every few weeks, consistently, for years. These get unofficially tracked at: https://supercharge.info/chang... [supercharge.info]

The government funding seems like it's really to help all the T

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[WillAffleckUW]

Almost all of the West in US and Canada has cheap plentiful renewable electricity.

It's not that hard to power them.

You should see how residential electricity has actually dropped over the last two decades. Pop out the power panel in the garage and upgrade it and you're golden. Triphase inverters and a powerwall and you can even charge when the regional grid drops.

Playing with Numbers for Context

[eepok]

A $100B valuation for a company whose only (publicly revealed) product is to deliver 55,400 battery electric vehicle pre-orders which they hope to deliver by the end of 2023. That means that each vehicle is inspiring ~$1.82M dollars of confidence.

I just went through their site and built the most expensive vehicle possible. Final bill: $90,515.

That's AT LEAST a 20:1 ratio of valuation to revenue anticipated through 2023. (Revenue. Not Profit.)

That doesn't seem healthy for a market. I can't help but wonder how much of the money invested in the IPO is actually debt.

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[CaptainLugnuts]

You've forgotten the 100K vans for Amazon that are the delivery priority.

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[eepok]

Oof! You're absolutely right! 100,000 vans by 2030. The first 10,000 vans to be delivered by the end of 2022, which means 10,000/year really. They're priced at ~$52,690. So... new calculations...

$6,068,331,000 estimated earned revenue through 2023

AT LEAST a 16.5:1 ratio of valuation to two-year revenue.

That's still too much, but definitely better than I originally posted. Thanks for the correction!

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[ghoul]

P/S ratio of 16.5 is much lower than say Zoom, Peloton or Docusign. If you are a growth company you get these ratios as the ratio is divided by growth. Noone looks at P/E they look at (P/E )/G

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[phantomfive]

If you are a growth company you get these ratios as the ratio is divided by growth. Noone looks at P/E they look at (P/E )/G

How is G measured in this equation?

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[ceoyoyo]

That's the WeWork mistake.

A software company that's already written it's software (e.g. Zoom or Docusign) can scale up pretty cheaply. Revenue is a bad, but not *that* bad surrogate for profit.

For a company that has to build actual products that are going to soak up 90% of that revenue no matter how big they get, it's not so good. Peloton is kind of in the middle: they have an actual physical product, but most of their revenue comes from selling subscriptions to their chaper to scale video library. Even so,

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[ghoul]

In an environment with 6% inflation and 0% interest rates you lose 6% just keeping money in the bank. So even an infinite P/E is better than a nothing. So traditional DCF models of valuation dont work in this environment. Its the TINA effect. With high inflation and 0 interest rates, There is no Alternative to stocks to preserve capital.

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[ceoyoyo]

Ah, excellent. Someone who will "invest" in anything! Can I interest you in some NFTs?

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[ghoul]

There is vast amount of paper wealth in Crypto which people cannot cash out as if they start converting it to dollars the crypto currencies will crash. So whales diversify their money by buying NFTs using crypto. Noone is using dollars to buy NFTs.

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[ceoyoyo]

How about some oceanfront property in Montana then? Hot deal, limited time. A condo more your speed? Good deal, fixer upper with the opportunity to add lots of value. Excellent investment property. Or maybe a startup that sells pet food online? You've gotta put your money somewhere, right?

If someone is trying to sell you that "OMG inflation, just buy *anything*" line, they either can't do math or they're getting a cut somehow. Suppose you're right and inflation this year is 6%. If you kept your money in dol

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[WillAffleckUW]

You missed all the vehicles they are selling in Canada. Most provinces have a requirement to phase out fossil fuel vehicles including trucks by 2030.

Wish them well

[AlanObject]

If it weren't for the CyberTruck I would have put an R1T on order. I saw one in the wild a few months back and it is a very nice looking ride.

Given the demand for BEVs right now I am pretty sure they will be supply limited. Whatever merits or disadvantages it has with regard to the CT won't matter much. The market needs more alternatives to Tesla.

The only thing that would concern me with regard to its energy efficiency. If I read the literature correctly, it gets about half the distance that my Mod

Do they have some unique technology?

[joe_frisch]

Rivian is entering a market that already has very big players, from Tesla to the electric offerings from old school auto-makers. Does Rivian have some new technology that they are using to make their vehicles competitive? Otherwise aren't they arriving pretty late to this game?

Like Tesla, silly

[boxless]

Oooh. An electric truck! Why didnâ(TM)t I think of that?

All of the stuff is or soon will be standard component technology in the auto supply chain. And the automakers, being the system integrators that they are, will simply integrate. Thereâ(TM)s nothing magical about Tesla or this company that deserves such high valuation.

Oh, and Musk belongs in jail. But you knew that already.