The euphoria around Rivian kicked into overdrive Wednesday as it debuted as a publicly traded company, with an opening share price of $106.75. If that sticks, it would give Rivian an implied valuation of $90 billion. The opening trade was nearly 37% higher than its listed IPO price of $78. That absolute eye-popping number makes Rivian one of the largest IPOs in U.S. history and puts its market cap above GM as well as one of its backers, Ford (GM’s market cap is $86.31 billion; Ford’s is $78.2 billion). That share price continued to rise after it began trading around 1 pm ET, hitting as high as $119 a share before falling to about $112.
The historic size of the Rivian IPO is not lost on founder and CEO RJ Scaringe. However, and perhaps as expected, he is bullish on the future of EVs, noting in a recent interview that the 90 to 100 million vehicles sold each year will transition to electric in the next 10 to 20 years. “Ultimately, the way investors look at the space is really valuing what the future looks like,” Scaringe said. “In not too much time, 100% of the business will be electric.” And while Rivian is very early in terms of its vehicles and launch, Scaringe said investors see and are valuing the company based on its future potential as well. “If they’re evaluating us purely on our P&L (profit/loss) today, I think they’d be missing the point of the company; they’re, of course looking at what they think the company is capable of achieving over time,” he said. The stock’s first trade was at $106.75 at 1 p.m. Eastern for 10.3 million shares, or 36.9% above the IPO price. Shares ended 29% higher at $100.73 after trading as high as $119.46. The stock held to gains in the extended session, up 3%. Rivian, which has big backers such as Amazon.com Inc. AMZN, -2.63%, Ford Motor Co. F, -3.78%, and T. Rowe Price TROW, -3.00% funds, is hoping to carve a niche for itself offering all-electric pickup trucks and SUVs, the type of vehicles U.S. residents have favored for decades. The auto maker started selling a limited number of its R1T, a two-row, five-seat pickup truck, in September. It plans to launch an SUV, the R1S, in December. Wider sales of the truck and the SUV are expected to begin in December and January. Rivian markets its vehicles as “electric adventure vehicles” with prices starting at low $70,000s. Rivian also plans to make electric delivery vans for Amazon and have its own charging network. One of the biggest obstacles for Rivian to overcome is the price of its vehicles, said Jessica Caldwell, an analyst with Edmunds. On a recent test, the electric pickup truck mostly performed as claimed, she said. It also has the advantage of being first to the market, with Ford planning to launch the electric version of its iconic F-150 next year and the Tesla Inc. TSLA, +4.34% Cybertruck entering production next year and hit volume production by 2023. But “the long-term volume expectations for a $70,000+ midsize truck aren’t very high,” Caldwell said. It will be challenging for Rivian to compete with the bigger, cheaper Ford F-150 Lightning when it becomes available, and the competition will grow fiercer as General Motors Co. GM, +1.11% is also expected to unveil its all-electric Silverado at CES next year, she said.
