Rivian IPO: What You Need To Know - Forbes

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Updated: Nov 10, 2021, 10:20am
Rivian Automotive, the California electric vehicle upstart, has filed paperwork with the Securities and Exchange Commission (SEC) to become a publicly company. In a filing on Nov. 9, Rivan disclosed it was targeting a valuation around $67 billion in its initial public offering (IPO), and raised the initial pricing of its shares to $78 from the $57 to $62 range it offered just last week.
This valuation would make the company only slightly less valuable than industry stalwarts General Motors (GM) and Ford Motors (F). That’s an impressive feat for a new IPO, but what’s really driving Rivian is growth like electric vehicle powerhouse Tesla, Inc (TSLA), which has seen its valuation shoot up from about $75 billion at the end of 2019 to more than $1 trillion today.
The promise of meteoric growth is irresistible for potential Rivian IPO investors. But keep in mind, splashy IPOs are never a sure thing. The EV space alone is littered with the wreckage of failed companies that promised to help solve climate change and make you rich along the way.
Remember Nikola Corp, which sought to become the Tesla of 18-wheelers? Founder and ex-CEO Trevor Milton was recently indicted for fraud by a federal grand jury for lying about “nearly all aspects of the business.” Rivian is no Nikola, but IPO investors should always do their homework.
Tesla has rocketed to ever-higher valuations in recent years at least in part because its cars became so cool. Not only did the owner of a Tesla Model S show themself to be someone who cared about the environment (despite questions about how green Tesla really is), but the car itself looked great.
With its R1T and the R1S models, Rivian is aiming to do pickup trucks and SUVs what Tesla did with sedans. Pricing of both models starts around $70,000, and each features a base driving range of more than 300 miles on a full charge. Just as importantly, they’re being advertised in the “Built Ford Tough” mold: Glossy videos showing the vigorous vehicles vying with the elements, whether desert sand or mountain snow.
The hope is that mass affluent truck shoppers won’t be able to get enough of Rivian. Remember, the Ford F-150 is and has been (seemingly forever) the best-selling vehicle in the country. In fact, the top six automobiles in the U.S. by sales are either pickup trucks or SUVs.
In addition, Rivian will have the added benefit of, like Tesla, selling their trucks directly to consumers rather than going through a traditional dealership model. That means no bleeding of profits to any middlemen.
This has whetted investor appetite, with Rivian recently raising $2.5 billion from the likes of T. Rowe Price (TROW) and Amazon Inc. (AMZN)—the latter recently acquired a 20% stake in the company and has already ordered 100,000 units for delivery by the end of 2030.
Rivan is hardly the only auto manufacturer aiming to corner the EV truck market. And among Rivian’s toughest competitors is one of its top investors: Ford Motors.
Ford will begin selling an EV version of its famed F-Series pickups in 2022, named the F-150 Lightning. Much like the R1T, the model also has a 300-mile range but carries a price tag that’s $30,000 less than Rivian’s. It’s already garnered more than 120,000 reservations since its debut in May while Rivian is still making itself known to the general public. (For will also net around $900 million when Rivian goes public.)
“Ford’s manufacture of a [battery electric vehicle, or BEV] full-size pickup shows how serious the company is about BEVs, as this segment is the lifeblood of the company at about 1 million units a year,” noted Morningstar analyst David Whiston after Ford’s May investor day. “CEO Jim Farley stressed that Ford will not give up its leadership in trucks as it moves to BEVs.”
Tesla’s not exactly going to roll over and forgo the most valuable slice of the auto market, either. It’s been working hard to perfect its own outlandish pickup truck model, the aptly named Cybertruck, which looks like something out of a Mad Max movie. Consumers are very interested in the Cybertruck; it has a reported reservation backlog of around 1.3 million. The cheapest option is said to be priced at about $40,000.
Throw in the likes of General Motors (with all-electric Silverados and Hummers), and Rivian will have a hard road to climb.
Even in the rosiest Tesla-like scenario, it could be a long time before a bet on Rivian pays off.
Tesla’s share price, for instance, bounced between $30 and $75 for most of the five years leading up to 2019. Though its stock now clocks in at over $1,100 per share, skeptics about the company’s viability abounded, and short sellers targeted the stock, betting against its success. Investors who held on faced massive uncertainty whether they would end up owning one most valuable companies in the world or (relatively) worthless shares.
Recent big-name IPOs have likewise been stuck in purgatory. For instance, Coinbase (COIN) has suffered through disappointing returns since going public in April, while the S&P 500 has returned more than 20% so far this year.
Rivian will inevitably face growing pains as a public company. No one will be driving around in a Rivian truck until late 2021 or early 2022—a date that has been pushed back more than once already and may be extended again as the company sorts through the supply shock caused by pandemic lockdowns. Nor has the company built up its own charging network.
Say what you want about Tesla’s boffo market capitalization, but you actually see folks riding around in them and parking at Tesla-branded charging stations.
That means investors need to be clear-eyed, patient and willing to cut losses should Rivian fail to launch as expected. Or you could wait until Rivian becomes big enough to warrant inclusion in the S&P 500 and buy it through a passively indexed, low-cost fund.

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Taylor is an award-winning journalist who has covered a range of personal finance topics in the New York Times, Newsweek, Fortune, Money magazine, Bloomberg, and NPR. He lives in Dripping Springs, TX with his wife and kids and welcomes bbq tips.


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